Insurance In California Is Changing. Here’s How It May Affect You
This story is part of the third season of KQED’s podcast Sold Out: Rethinking Housing in America. You can find that series here and read about why KQED chose to focus a season of its housing podcast on climate change.
By: Danielle Venton Nov 13, 2023
For most people, insurance is the first line of defense against climate change. When struck by wildfire, flooding or other calamity, an adequate insurance policy can come to the rescue. It’s like a financial first responder, an ambulance full of money to help people back onto their feet. Insurance is the reason something bad happening to you, like losing your home in a wildfire, doesn’t guarantee a slide into poverty.
But the industry is in serious trouble. Climate disasters around the state, especially worsening wildfires, threaten the current business model and millions of middle-class Californians. Climate risks exist everywhere. However, California is notable for companies racing out of Dodge. Seven of the top 12 insurance companies in the state, including Allstate, State Farm, Farmers Insurance and American International Group (AIG), have left California or pulled back from offering new policies in the last year.
As the Golden State grapples with the devastating consequences of increasingly frequent and intense wildfires, California officials are crafting a major overhaul to insurance regulations. It is meant to stop the exodus of companies and promote market stability, but it will almost certainly mean that insurance premiums will rise. Here is what we know, what to expect, and how it may affect you.
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