"This wildfire insurance crisis has been years in the making, but it is an emergency we must deal with now if we are going to keep the California dream of home ownership from becoming the California nightmare, as an increasing number of homeowners struggle to find coverage," Lara said in a statement.
The fires of 2017 and 2018 caused a combined $25.3 billion in damages according to the California Department of Insurance. That's exponentially higher than the previous wildfires in 2015 and 2008, which caused $1.1 billion and $719 million in damages, respectively.
The insurance industry has yet to release an estimate of damages from this year's wildfire season, but the costs are expected to be high. The most significant wildfire this year was the Kincade fire, which is started October 23 and has burned 78,000 acres in Sonoma county. It destroyed 374 buildings and damaged another 60, according to the California Department of Forestry & Fire Protection.
"The wildfires in California will likely make it more difficult for California homeowners to buy insurance," Stu Ryland, senior vice president of the Pacific Region at Sedgwick, an insurance claims management company. "Premiums are likely to go up, particularly in areas that are prone to wildfires and in some cases, it may be difficult for consumers to find an insurer willing to write their insurance."
While some insurers are pulling out and others are reconsidering how they price property insurance, it is still available in one form or another to every homeowner, according to the Insurance Information Institute.
However, those not insurable by regular insurance providers are having to turn to what's known as the California FAIR Plan, which is a government-sanctioned association of insurers who pool together to cover the highest risk properties. FAIR Plan insurance currently only covers $1.5 million in damages, although Lara has ordered that starting in April 2020 it will cover $3 million in damages. Currently the FAIR Plan only covers fire, not other forms of risk, but California regulators have announced that FAIR Plan insurers can start doing comprehensive coverage.
Earlier this month, the California FAIR Plan Association sued to block those changes, arguing Lara's order is illegal.
Karl Susman, owner of Susman Insurance Agency in Los Angeles, says the average annual premium on a homeowner policy plus FAIR to cover fire now costs around $2,500 a year, which is three times higher than it was three years ago.
"These wildfires are not sustainable for these companies. They aren't going to go bankrupt but they are just going to stop writing policies."