Insurance companies are refusing to renew homeowner insurance in many areas of California, where the state is so prone to wildfires.
Desolation after the wildfire in Pacific Palisade, Los Angeles - Photo: REUTERS
Amid a spate of natural disasters in California, many companies have refused to renew homeowners insurance, forcing residents to rely on more expensive but less affordable state insurance.
Forest fires cause too much damage
According to BBC, the wildfire in Los Angeles is becoming one of the costliest in US history, with estimated damage exceeding $135 billion.
Private forecasting firm Accuweather put the estimated damage at $135-150 billion as the fires swept through one of the most expensive residential areas in the United States.
The insurance industry is bracing for a major shock, with analysts from Morningstar and JP Morgan predicting insurance payouts for losses of more than $8 billion.
Firefighters in the affected area said the Palisades Fire has destroyed more than 5,300 structures, while more than 5,000 others were damaged by the Eaton Fire.
The figures given are still estimates, as the fires have not yet been completely extinguished.
Cancel insurance in high risk areas
Standing in the front yard of her parents' home, Lynne Levin-Guzman tried to save the house with a garden hose, because the insurance company would no longer cover the damage.
"I know I shouldn't be here, but this is my parents' house and they just lost a lawsuit, their fire insurance was canceled," Levin-Guzman told CNN affiliate KABC.
The Levin-Guzman family’s situation is becoming increasingly common in California. According to the most recent data from the state’s insurance department, insurers declined to renew policies for 2.8 million homeowners in the state between 2020 and 2022, including 531,000 in Los Angeles County.
These companies refuse to provide insurance in areas they consider to be at high risk of wildfires — areas that make up much of California.
With insurers refusing to renew or raising rates, many homeowners in the state are turning to the state-run FAIR insurance program, which offers higher premiums but less coverage than private companies.
According to the BBC, the number of insurance contracts under the FAIR program has doubled since 2020, from 200,000 contracts to 450,000 contracts by September 2024.
Source: https://tuoitre.vn/chay-rung-o-california-gay-thiet-hai-150-ti-usd-nganh-bao-hiem-soc-nang-2025011015334143.htm
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