Some California homeowners are now facing new wildfire deductibles in their insurance policies, causing concern among residents and officials.
Attorney Shant Karnikian, who represents Los Angeles residents affected by last year’s fires, discovered a $621,000 wildfire deductible in a client’s AIG insurance policy. This is separate from the standard $100,000 deductible.
The California Department of Insurance, led by Commissioner Ricardo Lara, plans to review these policies. According to The Washington Post, state law mandates that all fire losses should be covered, making separate wildfire deductibles potentially illegal.
These deductibles are found in surplus line policies, which are often the last resort for those unable to find standard coverage. These policies are not subject to the same regulations as standard insurance. However, California intends to scrutinize these policies to ensure compliance with state laws.
The introduction of wildfire deductibles is part of a broader trend of insurers adjusting to increased wildfire risks. United Policyholders Executive Director Amy Bach stated that insurers are trying to mitigate future losses by implementing such deductibles.
As wildfires become more frequent and severe, insurance companies are reassessing their exposure in high-risk areas. This has led to some insurers withdrawing from the California market completely. Homeowners are left with fewer options and higher costs, prompting concerns about affordability and accessibility of coverage.
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