For many customers in the Bay Area and California, condo, renters and home insurance premiums are skyrocketing, with more increases on the way.
State Farm Insurance is asking for another 30% increase in homeowners insurance premiums and is awaiting approval from state regulators. All State just got the green light for an average 34% increase in homeowners insurance premiums.
Glen Starkey continues to strive to minimise any risks that may be viewed unfavourably by building insurers.
“I play ball with them,” Starkey said.
He has never made a claim on any of his properties in his life. His insurance premiums with State Farm have remained stable, with minimal increases.
“I’m not going to suffer like some of the others who dropped out and have no income,” Starkey said.
Starkey is in a San Rafael neighborhood where the fire risk is low, but other homeowners living further north in parts of Santa Rosa feel like they’re on the verge of tears.
“Because of the fires in this area, they say my house is in the fire zone. So they charged an extra $1,200. Instead of $900 a month, it’s now $2,100. How am I supposed to pay that?” says a homeowner who wishes to remain anonymous.
State Farm Insurance, California’s largest insurer, is asking for premium increases of 30% for its homeowners insurance, 52% for renters and 36% for condo owners.
Last April, State Farm has announced zip codes of states where homeowners insurance coverage will be discontinuedwith Bay Area counties topping the list.
Last December, state regulators approved a 20 percent increase in insurance premiums for homeowners associations and condominium associations.
Garrett Goo works for a branch of State Farm Insurance. He explained how past rate increases have affected customers differently.
“This doesn’t necessarily apply to everyone. If you live in a higher-risk area, the percentage may be higher,” Goo said.
Frustrated residents say necessary renovation projects could be put on hold if prices rise again. Many argue that insurance greed is driving up prices, but did not want to speak on camera, fearing they will be dropped if they draw more attention to their insurance policies.
“The main problem is that home insurance in California hasn’t been worth it for some time,” says David Russell.
Russell, a professor of insurance and finance at Cal State University Northridge, says rising labor and material costs and other factors are to blame.
“As inflation and climate change drive up claims costs, the insurance industry is striving for higher numbers,” Russell said.
In recent years, California has seen an average of more than 7,000 wildfires each year, destroying an average of more than 800,000 hectares of land, according to the governor’s office.
Scientists and Californian authorities blame the climate crisis for the intensity of the wildfire season. Massive losses and claims for damages from devastating forest fires have placed a heavy burden on insurance companies’ balance sheets.
They claim state regulators are not approving necessary rate increases quickly enough, forcing them to stop issuing policies. But the homeowners say the California Department of Insurance is not behind them.
“Insurance Commissioner Lara is trying to balance the interests of insurers to maintain availability in the marketplace while also trying to avoid a price shock to consumers, even though that may be unavoidable,” Russell said.
Dozens of homeowners CBS News Bay Area spoke to expressed varying levels of frustration, while some said they understood the situation.
“Many families are not as fortunate as I am,” Starkey said.
Fearing rising premiums, Glen Starkey is extremely cautious about maintaining his properties and minimizing any risks, which is the only thing he can control in this new insurance market.
Insurance experts advise customers to look for cheaper rates if they expect significant increases.
Kenny Choi
