CNN
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When Chad Comey heard sirens outside the Palisades apartment where he lived with his parents last Tuesday, he didn’t think much of it. Then the fire alarms started.
“I remain hopeful, I rationalize things, like, we are in the heart of the village, it’s the last place where we have to take a stand, because if it burns, the whole village will burn,” he remembers having thought as he watched the fire approach. “You would never expect everything you learned to disappear.”
Comey, who cares for his disabled parents, delayed the evacuation as long as he could, eventually calling on a neighbor to help carry his mother in her wheelchair up five flights of stairs . When he was able to return to the rubble of his neighborhood a few days later, he found his house destroyed, one of more than 12,000 structures lost in the crash. Los Angeles wildfires.
“We all cried,” he said. “We were upset.”
Now he and his family face the daunting task of figuring out what lies ahead – a task made even more difficult by the fact that they don’t have a safety net.
“My family and I have no insurance,” he said. His parents had lived there long enough to pay off their mortgage and were no longer required to carry an insurance policy. So they withdrew because it was too expensive. “They are both disabled. They can’t afford it. What they have goes toward medical equipment, food, and paying the HOA fees, which amount to a thousand dollars a month.
The building where they lived had also just been written off by its insurance last year – deemed too risky in the event of a fire.
This is a situation many California homeowners find themselves in as insurers have given up millions of policies in the state since 2020.
“They stopped renewing what they thought was crap.*risk,” Los Angeles insurance agent Carla Ramirez said of large carriers, which have refused to renew their home insurance policies orstopped writing new policies in the state. “Last year they reassessed their entire fire risk. Previously, Palisades and Malibu did not pose a fire risk, and they reassessed; they said, we think this is a big threatening risk and it’s going to bankrupt us.
Shya Mousavipour’s parents were fired from their insurance less than a year before their Malibu home was completely destroyed by fire.
“They got a notice that even though you’ve paid off this policy for 18 years, we don’t insure people in this area anymore, so good luck,” he said. “They were forced to move on to California’s FAIR plan. Even if they are insured, like many victims of this tragedy, they are underinsured.”
The FAIR plan is intended to function as an insurer of last resort. Set up by the state, the policies generally have higher premiums and simpler coverage than private carriers. Residents often must combine FAIR plan fire coverage with other carriers’ policies to approximate their prior benefits, which can end up being a much more expensive package.
“It doesn’t cover the cost of rebuilding, what they lost, housing — they have to live somewhere for the next two years, maybe more,” Mousavipour said, anticipating his parents, who are at the end of life. 60 years old, will receive a “fraction” of the cost of rebuilding their home.
“They have paid for this all their lives. Their net worth has a lot to do with this house,” he said. “Our life was in this house. It was my mother’s dream house. They worked all their lives for this house.
Jamie Lite,who lives about an hour from Los Angeles in Actonlearned she would be dropped by her home insurance the same day her husband and son, both firefighters, were fighting blazes on the front lines.
“It felt like insult to injury,” she said. “Things are burning and knowing that my insurance is going to disappear from April 15, I just ask myself: what am I supposed to do? These are our homes, these are our lives. Here, my family is here to help remedy the situation, and these companies are preying on everyone.
In the last three years before it dropped, Lite says its premiums rose from $1,750 to $7,000 a year, costs it expects to rise even more with a new carrier. She feels trapped. “I couldn’t sell my house anyway; someone who comes in to buy probably can’t get insurance,” she said. “Who will buy it? It’s a trap. You’re stuck.
The insurance crisis is straining homeowners across the state.
Celeste Vander Ham, who lives farther south in Rancho Capistrano, paid $1,000 a year for insurance for the first 15 years of her home, but, after the Holy Fire of 2018, she says her insurance broker said his area had become a “10” for fire risk and “no one will insure you.” She and her husband were dropped from their wildfire insurance and had to use the FAIR plan to get coverage. They now pay a total of $10,000 a year for the policies needed to insure their home.
The costs are crippling given their limited income – he lives on Social Security benefits and she is his caretaker. With only eight years left on their mortgage, they had to refinance their home, taking out another 30-year loan to be able to pay for insurance. She now expects they will be forced to sell their home and leave the state.
“It’s really heartbreaking,” she said. “We’re going to be forced to leave because of home insurance.”
Ramirez, the insurance agent, said the state’s fire risks justify the higher premiums and suggested that homeowners don’t recognize “the true costs” of living in those areas. “If your area historically wasn’t at high fire risk but it becomes high risk, that’s the cost of living there,” she said. “If the cost of living there is more than you can afford, then I think you should move.” »
California owners traditionally had the choice of admitted or non-admitted carriers. Licensed carriers, like State Farm, Allstate and Farmers, are licensed by the state and must follow pricing regulations, which they say make it impossible for them to insure high-risk areas. Non-admitted carriers are typically small insurers that operate without the same regulations, so the state does not have to approve their rates or policies. As a result, they often charge higher premiums but can offer coverage in riskier areas.
Admitted carriers have been withdrawing from California for two years. Allstate stopped accepting new policies in the state in 2022, Farmers put a cap on California policies it would write in July 2023, and State Farm stopped writing new policies in the state in May 2023, followed by an announcement in 2024 that it would not renew approximately 72,000 policies.
Farmers and State Farm did not immediately respond to a request for comment.
In a statement, Allstate said the company “has suspended the sale of homeowners insurance policies to new customers in 2022. We continue to offer coverage to most existing homeowners insurance customers…Regarding regarding wildfires, we moved to California with claims staff. and several mobile claim centers to provide our customers with one-on-one assistance and help them file a claim,” in addition to donations to disaster relief.
Ramirez said owners dropped by these and other carriers were shocked by the prices of the FAIR plan or non-admitted carriers, which can cost $20,000 to $30,000 per year in fire zones.
“Most people chose to keep media coverage low because of sticker shock,” she said. “Your price just tripled, and we’re telling you to raise it twice as much, and people were like, ‘Ehhh, not so much, I’m fine here.'” That approach, she said, left many many Californians are uninsured or underinsured as they deal with the aftermath of the devastation.
“This is how we have to price now,” she said. “And look, they all burned, didn’t they?” The insurance company wasted a lot of time. The price was accordingly.
Residents like Comey and Mousavipour say they understand that insurance companies are businesses that operate for profit, but that the current model is unsustainable.
“We need a solution where people are fully insured in these areas, and because they are private companies, you have to incentivize them to want to work here,” Mousavipour said. “I don’t think the answer is that people shouldn’t live there, but it needs to be addressed and it needs to be a real investment in fire prevention measures, so that when it happens produce, we are ready.”
Comey pointed the finger squarely at insurance companies.
“We’re focusing on the wrong things here by putting corporate profits ahead of people, and it’s people’s lives that were lost and everything they learned,” he said.
GoFundMe is full of fundraisers for area homeowners who said they did not have insurance or their plans had not recently been renewed. A fundraiser for the Comey family has already raised more than $130,000.
“I feel blessed by the generosity people have expressed,” he said. “I also think it’s a sad state of capitalism and the free market that everyone has to rely on GoFundMes to stay afloat or get back on their feet.”