New regulations aim to reduce cost of fire insurance

Joan Salvatore moved to this remote part of Chatsworth to retire and relax but finds herself stressed out after her fire insurance premium increased by 400%.

"It's stressful every month wondering where I am going to get the money to pay my bills," she said.

Last fall, Salvatore got a notice from Travelers, an insurance company, that she had been dropped as a client because of an "increased risk of wildfire loss." Unable to find another insurer willing to cover her, Salvatore was forced to enroll in the state-run insurance program called the California Fair Plan with a $4000 a year premium. On her previous plan, she paid $1000 a year.

"It means that my little part-time job that was supposed to be my retirement "fun money" is allowing me to barely scrape by and pay my bills," Salvatore said.

In an effort to drive down the costs of coverage, state insurance commissioner Ricardo Lara is proposing new regulations that would require insurers to offer cost incentives for homeowners that stake steps to reduce fire danger around their homes.

"Californians are rolling up their sleeves and reaching into their own pockets to protect their homes and businesses. Insurance pricing must reflect their efforts. Holding insurance companies accountable for accurately rating wildfire risk in the premiums they charge Californians will help save lives and reduce losses," said Lara.

In hopes of greater transparency, the new regulations would also mandate insurers to assign wildfire risk scores to properties.

"My new regulations will help encourage a competitive insurance market for all by putting safety first and driving down costs for consumers," said Lara. "I invite consumers to attend the hearing on these regulations happening on April 13."

Los Angeles County Supervisor Kathryn Barger included a survey from the California Department of Insurance in her latest newsletter in hopes it will compile data to understand the full scope of the problem.

"I think the goal of this survey is to come up with solutions to what is going on in the state, and that is that insurance companies are reluctant to write homeowner policies based on the fact that we have had many wildfires," said Barger. "It's no longer a season, it's a year-round issue."

The survey will be open for a year and anyone in California can respond. The regulation hearing is on April 13. To register for the virtual hearing click here.