In fire-prone areas, how much longer can residents afford to insure their homes?

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The Woolsey Fire seen from Topanga, California. Photo credit: Forest Service, USD. Photo courtesy of Peter Buschmann.

Last November’s Woolsey Fire burned down hundreds of homes in LA and Ventura counties. In response, home insurance companies are raising the rates of some policyholders, while opting not to renew the policies of other homeowners. Not all residents saw changes to their insurance plans. But many are wondering how much longer they can afford to insure their homes in fire-prone areas.

Malibu Mayor Jefferson Wagner says residents are affected differently:  "The regular Malibu folks, the ones that aren't the wealthy, the ones that have been here since the 60s or 70s that paid off their mortgages… those folks are the ones that are going to be impacted by the rate increases on the insurance. The wealthy Malibu, the other Malibu, it's just another nuisance." 

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Malibu mayor Jefferson Wagner. Photo by Avishay Artsy. 

Wagner runs Zuma Jay’s surf shop right off Pacific Coast Highway. His home was burned in the Woolsey Fire, and he was hospitalized for smoke inhalation while trying to save his house. He's had a policy with Allstate for 10 years. Now he’s fighting Allstate in court and hoping they’ll pay to rebuild his house exactly as it was.

"You have to go back to the basic premise of the California insurance system, which is risk-based," says Mark Sektnan, spokesman for the American Property Casualty Insurance Association. "Companies also need to make sure that they don't have too much risk in a particular area."

He points out a fallback: the California FAIR Plan. It offers the most basic fire protection, not theft or water damage or liability (people would have to buy those separately). It costs more than a traditional policy. It only insures homeowners for up to $1.5 million in losses, which doesn't go far in a place like Malibu.

The state’s Department of Insurance has seen a 25% increase in FAIR Plan usage in higher risk regions of California in four years.

The housing market has been hammered by two consecutive record-breaking fire seasons. There were 15 major wildfires last year in California, which cost insurance companies $24 billion. 

Malibu real estate agent Paul Grisanti hopes the exodus of insurance companies from the area is temporary. "The insurance companies have a herd mentality, and they've all decided it's safer on the other side of the pasture. But after the people who stay and get to eat all the nice juicy clover over here for a couple of years, everybody else is going to go 'why aren't we getting that nice juicy clover?' "


Real estate agents Sara and Paul Grisanti, in front of a home they own on Las Flores Canyon Road in Malibu. Photo by Avishay Artsy.