The regulation proposed by the state's Insurance Commissioner Ricardo Lara in February would mandate that all insurance companies have to give California consumers discounts for reducing their wildfire risk - also known as "hardening your home."
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"It's the only way we're going to be able to bring down the risk so that Californians can keep their insurance," Lara said.
If approved, the regulation would go into effect by the end of the year. The proposal includes benefits, like requiring that insurance companies provide consumers with their property's "risk score" and creating a right to appeal that score.
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A possible 'loophole'
But critics like Consumer Watchdog argue the regulation has a loophole.
And Bay Area families appear to be stuck in it.
"There were no questions.They said, 'You're done. You have no options,'" said Santa Rosa residents Mark and Alma O'Brien.
Their longtime insurance provider AIG dropped them as the company announced in January that it was pulling out of the state for certain categories of the regulated insurance market.
"So we were left to scramble. We've been trying to find alternate insurance," Mark O'Brien said. "I've went to three or four different carriers and got turned down."
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The O'Briens tried Farmers, State Farm and AAA Insurance.
"All of them denied us," he said. "They go, 'What's your address?' And you hear this dead pause. And they go, 'Oh, well, we're not insuring in that area.'"
Alma and Mark had yet to file a claim. But, since the Glass Fire tore through their Napa County neighborhood two years ago, burning down 60 homes on their street - they've made investments to reduce their wildfire risk.
"We added vulcan vents, sprinklers on the roof, cleared five feet of our house," Mark O'Brien said. "Plus, trimmed all the trees off the house and put in hardscape in our entry."
It is the same story with their neighbor, Harriet Buckwalter.
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"My husband was cutting down trees for about six weeks straight," she said. "We spent another $4,500 to do the trees we couldn't do and cleared all around our home. Plus had CALFIRE come out and do an inspection."
Buckwalter says she contacted 25 different insurance providers, but none of them were writing policies in the area.
In February, Lara proposed a regulation that aims to prevent this - making promises that wildfire insurance will be required to consider mitigation efforts when granting a new policy.
"If insurance companies take into account the home hardening, then it will truly reflect the actual risk, which currently they're not doing," Lara said. "So we're saying with this new regulation, insurance companies have to take that into account."
But the problem is that people like the O'Briens and the Buckwalters still aren't getting insured.
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"That's the huge loophole in this rule that could really swallow its promises," said Carmen Balber, the executive director of the non-profit Consumer Watchdog.
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Balber says while the regulation sounds good on paper, it doesn't tell the whole story.
"There are two parts of the insurance transaction. First, insurance companies decide if they're going to sell you coverage. And second, they decide what price they're going to charge you," Balber said. "This regulation addresses the price, which of course is important to all of us, but it doesn't address the sales question-- whether or not you're going to get a policy at all."
In other words: insurance companies are not required to consider mitigation steps when deciding whether to sell a consumer a policy. So residents living in areas with high fire risk may be left unprotected.
Even the state's former Insurance Commissioner Steve Poizner wasn't renewed by his carrier, despite spending tens of thousands of dollars on mitigation, according to his op-ed published in the LA Times.
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It is the same story with these families.
"I don't know anybody who's been able to get insurance," Buckwalter said, referring to her network in Santa Rosa.
"We're stuck," O'Brien said.
Both families told ABC7 they were left with one real option: the California Fair Plan.
The California Fair Plan
The California Fair Plan is the state's insurer of last resort, providing access to fire coverage for California homeowners unable to find insurance in the traditional marketplace.
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"It's extremely confusing," Mark O'Brien said.
And it's not cheap.
"It's at least double what we paid before, with less coverage" said O'Brien.
"Our coverage is about three-and-a-half times more than what we had before, and it's also with a $20,000 deductible," Buckwalter said.
Buckwalter says without the deductible, the California Fair Plan would've been around seven times more expensive than her existing policy.
Ricardo Lara: "The FAIR plan needs to be affordable and available for every Californian who needs it."
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Stephanie Sierra: "The problem is, it's not affordable and it's not comprehensive. What are you doing to change that?"
Ricardo Lara: "What we need to do is provide a comprehensive policy option that currently does not exist in the FAIR plan, so that people aren't having to pay the extraordinary amount of administrative fees that only adds to the cost."
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Eliminating administrative fees is one step, but consumer advocates argue that unless the regulation is amended, the loophole will leave the most vulnerable communities struggling.
Consumer Watchdog, along with several other consumer organizations, sent several letters calling on the Commissioner to use his authority to close what they consider the 'non-renewal loophole.'
The Department of Insurance rejects these claims, adding that the regulation will still require insurance companies to recognize and reward consumers' mitigation efforts by offering discounts. But it won't require insurers to grant a policy based on those efforts.
What's next
The ABC7 News I-Team asked if Commissioner Lara will be amending this regulation to change that.
We were told: "Commissioner Lara can take actions within the scope of the regulation and will consider all public input. We urge people to contact the Department of Insurance, who can review their non-renewal."
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The department also lists the following as expected benefits of the regulation:
- Incentivizing individual and community mitigation efforts by requiring insurers to consider property and community-level mitigation against wildfire risk;
- Reducing the risk of loss posed by wildfires;
- Improving accuracy in the classification of wildfire risk and the resulting rates and premiums;
- Increasing transparency in, and consumer awareness of, insurers' rating and/or scoring of wildfire risk;
- Enhancing consumer protection by establishing a consumer appeals process;
- Reducing unfair discrimination by enhancing consistency in insurers' wildfire rating practices and/or risk scoring practices; and
- Potentially improving availability and affordability of property-casualty insurance for communities and properties where wildfire mitigation measures have been implemented.
The regulation is expected to go into effect before the end of the year.
Contact the department's consumer hotline here.