Homeowners could still lose fire protection under new insurance proposal: What you need to know

ByRandall Yip KGO logo
Friday, August 26, 2022
Homeowners could still lose fire protection: What you need to know
More than more than 200,000 California homeowners lost their fire coverage in 2020. Will a new proposal really help?

CALAVERAS COUNTY, Calif. (KGO) -- New regulations are about to be released to potentially cut down on the number of homeowners who lose their fire coverage because their insurance company refuses to insure them.

The latest statistics released in December revealed that more than 200,000 California homeowners lost their fire coverage in 2020. Some say while the new proposal is a step forward, they fear it does nothing to prevent homeowners from losing their coverage.

A one-acre property and home in Calaveras County has belonged to Mike Bettencourt and his wife Mary Ruth for 30 years.

7 On Your Side asked them what their home means to them.

"Everything, actually. Along with my wife, this is all I need in life," said Mike with Mary Ruth by his side.

They've done everything possible to keep their home fire safe. They cut down the vegetation surrounding their home and kept trees to a minimum.

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The California Department of Forestry recently gave their home a passing grade for fire protection.

The couple however received a notice in January from Allstate informing them they would need to make changes to the small overhanging on their roof to improve fire protection or risk losing their fire coverage, which would expire in July.

They agreed to pay a contractor $6,000 to get the work done.

Before the work could even begin, they received bad news in May.

Allstate ruled their area posed an extreme fire danger and decided not to renew their coverage.

"It was devastating. It was like, this was the last straw. This is ridiculous. Never had a claim and then they just say, 'OK, we're going to drop you,'" Mary Ruth said.

RELATED: EXCLUSIVE: What is a fire risk score? Here's how it impacts your insurance coverage

A law passed by then-Senator Ricardo Lara in 2019 imposed a temporary moratorium on non-renewals in both 2019 and 2020.

But that moratorium is now expired.

Now Insurance Commissioner Lara is poised to announce new protections sometime before the end of summer.

He has proposed forcing all insurance companies to offer discounts for homeowners who take steps to alleviate fire danger.

Consumer Watchdog estimates 60% of insurance companies currently don't offer such discounts.

"It's absolutely critical for our entire state, for the entire insurance market, that consumers are given the right incentives to protect their homes from fires," said Carmen Balber of Consumer Watchdog.

The proposal also calls for greater transparency about the fire risk scores homeowners receive and disclosures about what they can do to decrease their fire risk score.

But it does not prevent an insurance company from refusing to renew a policy, even if they've taken all the necessary steps to mitigate fire danger.

"He should be sticking his neck out for consumers saying you cannot cancel policies without at least considering these steps. And that's what he's not doing," Balber said.

RELATED: 'Catastrophic model' could be used to set your fire insurance rates

Among those who have lost their fire insurance is former Insurance Commissioner Steve Poizner who wrote an op-ed in the LA Times calling for reform.

Lara defended his proposal, telling 7 On Your Side: "These regulations will drive down costs for consumers who make their properties and communities safer and will increase competition for consumer's business."

The Bettencourts think he needs to do more.

"Most cases, you're spending a lot of money to comply and now they drop you," said Mike.

Insurance Commissioner Lara's office says once the regulations are announced, they could go into effect by the end of the summer.

Take a look at more stories and videos by Michael Finney and 7 On Your Side.

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