CA insurance regulator announces new incentives for fireproofing homes

Measures being taken in order to ultimately lower insurance premiums in the state

CA insurance regulator announces new incentives for fireproofing homes

Catastrophe & Flood

By Lyle Adriano

To help prepare homeowners protect themselves from the risk of wildfires – and to lower insurance rates at the same time – California insurance commissioner Ricardo Lara announced that there would be new incentives for owners of older homes who choose to make their properties more fireproof.

The new “home hardening” incentive is part of the new partnership between the California Department of Insurance and Governor Gavin Newsom. The state insurance regulator, together with other government agencies, plans to improve home hardening by encouraging measures such as replacing single-pane windows to double-pane, and using fireproof wood treatments.

“With home and community hardening standards in place, Californians can hope to save lives and property through safer homes and increase insurance availability at the same time,” commissioner Lara said in a statement earlier this week. ““Our insurance market is responding to higher wildfire risk, so safeguarding homes will assist consumers in finding and keeping their insurance.”

Lara also said that he wants to see insurers reward consumers’ efforts to protect their homes, by putting money back into homeowners’ pockets.

“Both consumers and industry should embrace mitigation because we are at a crossroads, where we all realize that we have to reduce the overall fire risk and unfortunately, fires are not going to go away anytime soon.”

In addition to ensuring that Californian homes are more resilient against fire, the measures were designed to also control the rising cost of insurance in the state.

“The main goal is to lower insurance premiums for people,” fire insurance expert Mia Gonzalez told California Globe. “There’s a lot of older homes in California that can easily catch fire due to a lot of risks stemming from the houses not being upgraded for decades and not adhering to some basic fireproofing principles.”

During his announcement earlier this week, Lara also mentioned that many insurers have dropped coverage in California, or have significantly raised their rates for homeowners in areas of high fire risk. The commissioner noted that 31% of all insurers dropped residential fire policies in the state between 2018 and 2019; this subsequently led to a 225% increase in the number of homeowners enrolling in the state FAIR emergency fire insurance plan.

“It wasn’t outright said, but they also want less people on the state plan,” Gonzales explained. “FAIR is for people who have no other option for fire insurance because it’s the equivalent of minimum coverage for cars. And if a fire hits, even with minimum coverage, it can cost a lot.”

“The state wants people back on private insurance and sees this as a cheaper way to do that rather than risk those FAIR people possibly getting large amounts of money should a wildfire occur.”

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