Homeowners scramble as insurance companies raise rates and drop coverage: 'I cannot sleep thinking about what's going to happen'
One state is trying to do more to help homeowners who've lost insurance coverage.
What's happening?
California is perhaps the heart of the problem, and while relief won't be immediate, it is coming. Thanks to the Sustainable Insurance Strategy, the Department of Insurance says there will be more insurance options for residents next year, NBC Bay Area reported.
The channel detailed the plight of one homeowner, Maria Espada, who was dropped by Safeco after 12 years. She was one of 75 people in her ZIP code and 955 people in the San Francisco Bay Area who had a policy canceled.
"I cannot sleep thinking about what's going to happen with my home insurance," said Espada, of East Oakland. "Why [did they] choose me? Because I'm a good customer. I pay regularly my policy."
Safeco cited "the Bay Area's significant earthquake risk and the resulting home fires they cause," though companies are free to do as they wish. A new regulatory environment could change that.
"Insurance companies are going to have to specify and detail where are the policies that they're writing," deputy insurance commissioner Michael Soller told NBC Bay Area. "The newer policies that they're going to write that are higher risk policies, they can't just walk away from them. They can't just say, 'No that's not my job.'"
Watch now: Can the government create hurricanes?
Why is this important?
The epidemic of lost coverage is sweeping the nation, as policy writers are finding that it's no longer profitable to engage in certain business. A lot of it has to do with increasingly severe extreme weather events such as floods, hurricanes, and wildfires.
These worsening natural disasters are driven by the consumption of dirty energy sources, which release heat-trapping pollution into the atmosphere. That, in turn, is causing the rapid warming of Earth, which means more water vapor in the air and also hotter, drier conditions.
In addition to displacing tens of millions of people around the world, these storms and other events are threatening personal and commercial properties. If you can't insure a home or building, you may not be able to secure a loan. This prevents sellers and buyers from doing business in the marketplace.
What's being done about canceled policies?
More than 408,000 Californians — a record — are covered by the state's FAIR Plan, an "insurer of last resort," per NBC Bay Area. The Sustainable Insurance Strategy is set to be implemented by December, and new rate filings will be accepted by January, ABC10 reported.
The Department of Insurance has worked with insurers and consumer groups to change the regulatory environment, mainly so companies can use "forward-looking catastrophe modeling" instead of historical data, per ABC10.
Insurance Commissioner Ricardo Lara said this will expand the marketplace and bring down costs, though there are criticisms that companies will exploit loopholes.
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Homeowners scramble as insurance companies raise rates and drop coverage: 'I cannot sleep thinking about what's going to happen' first appeared on The Cool Down.
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