Sunday, January 5, 2020

California real estate market takes hit as fire insurance costs grow

PG&E reaches $13.5B settlement for wildfire victims

FOX Business’ Susan Li reports on courts approving PG&E’s settlement with wildfire victims, potentially paving the way for the company to exit bankruptcy.

California's wildfires are cooling the state's real estate market as insurers seek to back out of fire-prone areas and would-be buyers face high costs for plans.

Continue Reading Below

The situation is causing buyers to have a hard time finding insurance and to then back out of purchases or lower their offers, The Wall Street Journal reported Sunday, citing real estate agents and homeowners.

California has seen numerous wildfires in the past few years. There were 16 in last October alone. Last month, state officials added protection for homeowners, preventing insurance companies from dropping them as customers for a year after a disaster-level wildfire burns near their homes.

Firefighters battle the Cave Fire burn as it flares up along Highway 154 in the Los Padres National Forest, above Santa Barbara, Calif., Tuesday, Nov. 26, 2019. (AP Photo/Noah Berger)

CALIFORNIA TO PROTECT INSURANCE POLICIES IN WILDFIRE AREAS

State officials added the rule after they said insurers had dropped fire coverage for more than 350,000 residents following devastating wildfires in 2018.

The new protections apply to more than 1 million California households, according to the report. But they don't cover homebuyers or owners in areas that didn’t have a wildfire in 2019.

The amount of damage caused by California wildfires has increased dramatically in recent years. Wildfires in 2008 caused $719 million in damage, The Associated Press reported. In 2015, California wildfires caused $1.1 billion in damage. The combined damage total for 2017 and ’18 was $25.3 billion, according to the report, which cited the California Department of Insurance.

GET FOX BUSINESS ON THE GO BY CLICKING HERE

A wildfire approaches a residential subdivision Oct. 24, 2019, in Santa Clarita, Calif. (AP Photo/Marcio Jose Sanchez)

WILDFIRES TORCH CALIFORNIA’S PROPERTY INSURANCE MARKET

For homeowners who can't find an insurer elsewhere, California does offer insurance through its FAIR Plan. But the policies have coverage limits of $1.5 million, don't cover other standard items like theft and can cost thousands of dollars a year, the Journal reported.

"Putting an even higher bar on the financial requirements of homeownership means that some folks are going to get priced out," Jordan Levine, deputy chief economist for the California Association of Realtors, told the Journal.

CLICK HERE TO READ MORE ON FOX BUSINESS

Source: Read Full Article

No comments:

Post a Comment