Fire insurance is a sore subject for people buying homes in Humboldt County.
Several to tens of Thousands of dollars a year for some regions of the county, even if the house you want to buy is unlikely to catch fire or maybe it's in close proximity to a fire department. It doesn't matter, in Humboldt County, many regions have outrageously high fire insurance.
I wondered, why? Until recently I always assumed fire insurance was expensive because of the severe wildfires of 2017 and 2018, but there is actually quite a bit more going on. After a little research the typical reasons for something over priced were readily available. Price controls, over regulation and inflation are the real culprits for why Fire insurance is so insanely expensive in Humboldt County.
Perhaps the biggest man made part of the problem are the price controls, for more look to Proposition 1-0-3 passed in the year 1988.
This law requires insurance companies justify rate increases based on their average annual wildfire losses over the last 20 years. Insurance companies were forced to lose a lot of money, Given the fact that wildfire losses have increased exponentially when compared to 10 years ago, Prop. 103 forces insurance companies to not charge dramatically more until they take essentially take a loss from a massive fire disaster and can thus lobby the state for an increase (1)
While you and I might not think of Prop 103 as a price control per se, that is exactly what it has ended up being. Only from future horrible fires and property devastation that is so bad it makes a 20 year average budge, can insurance companies look to increase their rates. That is insane, the services we buy should always have some bearing on the experience that is being purchased. Not so with Fire insurance.
If insurance companies had more flexibility with their rates and realms of coverage, they would deliver a better service, especially to rural Humboldt county. But because of this proposition and a one size fits all approach to insurance companies, many of these groups are tired of losing money in the state and are leaving California behind. Several well known insurance companies now believe that selling fire insurance in the Golden state is not worth the risk.
To make matters worse, instead of de regulating or pushing for a better proposition for the voters, the state has tried to bridge the gap with a high priced and low perceived value state backed insurance that is not good for anybody. The rest of the country has a wide range of insurance carriers to shop with, Californians ought to have the same variety of choices.
SOURCE:
1) https://www.policygenius.
