In southern parts of the state, residents have been watching their premiums rise due to the fires.
Dozens of Southern Californians are threatened by forest fires and at the same time as they worry for their homes, they are watching their California wildfire insurance premiums skyrocket. Many houses have already been damaged – or nearly damaged – which can be enough to affect premiums.
That said, it’s important to note that wildfire insurance won’t automatically spike right away.
The odds are that California wildfire insurance rates will rise. This is particularly true for those who were directly impacted or nearly affected by the blaze. The Insurance Information Institute’s California representative, Janet Ruiz, agreed that rates could rise. Still, she pointed out that this is not something that will be happening immediately.
“Insurance companies don’t react immediately to something like a specific fire,” she explained. She added that “They will look at the last five to 10 years and the history of the area where the homes are.”
There are many different factors that are taken into consideration for calculating California wildfire insurance rates.
Moreover, there are some actions policyholders can take in order to reduce their homeowners insurance rates. These include clearing away brush located close to the house. Sprinkler systems also often make a home eligible for a discount in premiums.
Ruiz also shared that some locations have what is known as “fire-wise communities.” Those are places in which entire communities work together to keep the land clear. Insurance companies take those factors into account as they examine a location’s history. They look at the types of precautions that have been taken in order to protect the homes and other structures.
Currently, the average fire insurance deductible in the state is between $1,000 and $2,000. That said, homes in higher risk areas and that are more expensive to begin with may see $5,000 deductibles. This, according to Insurance Information Institute figures.
At the same time, as the patterns reveal themselves and one place proves to be a higher risk than another, California wildfire insurance rates will change. Equally, companies must receive approval from the California Department of Insurance before the rate hike can be applied.