California Insurance Crisis: Non-renewals and the CA FAIR Plan

MARIPOSA COUNTY, Calif. (KFSN) -- Owning a home is often viewed as part of the American dream, but insurance challenges have created a nightmare for many Californians.

Over the past several years, a number of major companies have stopped writing new policies in the state. Experts say it's due to several factors, including the rising costs of labor, material shortages and climate risks.

"So we're seeing more wildfires and larger losses," Director of Communications for the Western States for the Insurance Information Institute, Janet Ruiz explained.

Many homeowners have received non-renewal notices - forcing them to use the California FAIR plan. It's a private association that offers coverage when traditional companies will not.

"Sometimes, companies just have too many homes insured in a risky area," Ruiz said.

In Mariposa County, 42% of homeowners are already using the FAIR plan as the county has the third highest non-renewal percentage in the state at 6.87%.

Jacob Hawley has lived in Mariposa for most of his life. He says his home insurance was not renewed in 2021, and the FAIR plan was his only option.

"We call it the 'CA unfair plan' actually," Hawley said. "Sorry to say it because it does feel unfair that we get dropped and then we're paying double the price. I think it's three times the price we'd pay under a normal insurance."

Eight months after the change to his insurance, Hawley lost his home in the Oak Fire - in July of 2022. He says many who suffered that same fate did not have insurance at all.

"A lot of people can't afford it," he stated. "$6,000 to $8,000 for your FAIR plan insurance for a typically normal about $400,000 to $500,000 home. That's what you're going to be spending about."

The Insurance Information Institute says there are ways to lower the cost of insurance through wildfireprepared.org. You can do an online assessment and arrange for an inspector to come out to your property.

"It doesn't cost much, and you get a designation that says you are a wildfire prepared home, and that lasts for three years," Ruiz explained.

However, the FAIR plan is just fire insurance. Then you also have to get your wrap-around policy.

"You have your mortgage on top of your taxes you're paying into. It just adds up," Hawley expressed.

Getting on the FAIR plan can take time.

"You need to have 30 days application, but your insurance agent can help you with that too," Ruiz said.

Hawley says the process took him three months for a second home he owns in Mariposa.

"If a fire did happen within those three months, my house could've burned down. Another house and I would've had nothing," he stated about his second home.

Three years after the Oak Fire, Hawley is still rebuilding the home he lost.

"Between mortgage companies holding up funds and insurance companies holding up funds and pretty much fighting them to the bitter end saying no we need this amount to rebuild a house that our family lived in before this fire happened and that's what we thought we had insurance for and they just made it really difficult," Hawley explained.

Hawley says despite the setbacks, he has no plans to leave the mountains and is grateful for the community support that has helped keep his "American dream" alive.

Action News reached out to representatives for the CA FAIR Plan Association but were told it will not be doing interviews as the association is "focused on claims arising from the Los Angeles fires and serving affected policyholders."

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