California state regulators have announced a one-year moratorium banning insurers from not renewing homeowner’s policies in areas impacted by wildfires, Los Angeles Times reports, as the state has experienced a number of insurers leaving the hardest-hit areas of the state.
“I have heard the same story again and again. People getting dropped by their insurance after decades,” said Insurance Commissioner Ricardo Lara. “To add insult to injury, many struggle to find coverage.”
Los Angeles Times reports that the plan affects more than 800,000 homeowners in Northern and Southern California who live in ZIP codes next to 16 recently declared wildfire disasters, including high-priced areas such as the Los Angeles, Orange, and Santa Clara Counties.
“This wildfire insurance crisis has been years in the making, but it is an emergency we must deal with now if we are going to keep the California dream of homeownership from becoming the California nightmare, as an increasing number of homeowners struggle to find coverage,” Lara added.
Redfin previously reported that these counties are at risk of losing more than $2 trillion worth of housing as a result of recent fires.
Los Angeles County has 1.49 million households valued at $1.2 trillion, with an estimated median home value of $625,000. Orange County has a total housing value of $502.6 billion, with a median home value of $709,800.
“Homes in places like Malibu, the hills around Los Angeles and wine country in Northern California have historically been desirable because the natural beauty of the surroundings has outweighed the risk of natural disaster,” said Redfin Chief Economist Daryl Fairweather. “But with homebuyers and sellers in fire-prone parts of California really starting to feel how environmental risk factors are impacting both the safety and value of their homes, long-term demand will change, though California overall is unlikely to lose its luster. Demand and prices for homes in fire-prone areas will go down, but as a result, they’ll increase in safer parts of the state. California is in the midst of a housing shortage, and the state should take wildfire risk into account when deciding where to focus its building efforts.”