Even California Fire Stations Can’t Get Fire Insurance

A U.S. forestry firefighter cools a burning modular home to protect a nearby structure in Deerhorn Valley as the Harris fire rages near Jamul, Calif., on Oct. 24, 2007. David McNew/Getty Images

California’s homeowners insurance crisis has left even some fire stations without coverage, which left lawmakers in shock during a recent Cal Fire budget discussion.

“There is a story right here. We can’t get fire insurance at a fire station that is going to be manned by firefighters. That is where we are in California. That, to me, is just crazy,” Republican state Sen. Brian Dahle said during a Senate Budget Subcommittee meeting.

The issue came up in a discussion about the costs to modernize some firefighter and emergency response facilities, during which an official with the California Department of Finance told lawmakers an $11 million project in Tehama County at the Cal Fire Ishi Conservation Camp was unable to secure bonds. The reason, according to the official, is that insurers including the state’s last resort Fair Plan couldn’t cover the facility to the bond underwriter’s required level.

“The insurance industry, they weren’t interested in selling insurance policies in the region due to the perceived fire risk in the area,” Finance Department analyst Victor Lopez said during the meeting.

Tehama County is in northern California; the Ishi camp is about 150 miles north of Sacramento.

A spokesperson for the California Department of General Services, which manages state facilities, has found 11 Cal Fire locations that could be unable to obtain fire insurance and another five non-Cal Fire stations, spokesperson Monica Hassan told Politico in an email.

Given the recent news, both Cal Fire and the Finance Department have begun reviewing similar projects at other stations, Cal Fire Deputy Director Mike McGinness said during the meeting.

In February the Fair Plan Association saw a record number of new policies as more insurers flee the California market, leaving homeowners with one choice.

The Fair Plan provides basic coverage when other insurers aren’t available, but premiums are usually much higher. The plan now insures about 373,000 properties, adding 15,000 in February alone—the most ever. The plan has doubled in size since September 2019, officials said during an Assembly Insurance Committee meeting last month.

During that meeting, a representative for the Personal Insurance Federation of California said that if a wildfire in California cost the Fair Plan $4 billion today, it could absorb only half of that, and private insurers would be on the hook for the remaining $2 billion.

Also in March, State Farm announced it would halt policy renewals for about 72,000 homes and apartments, with Contra Costa and Los Angeles counties especially hard hit.

The decision will begin to affect policyholders on a rolling basis beginning in July for homeowner, community association, and business owner policies, and beginning in August for commercial apartment policies, State Farm officials said.

Because of recent disasters that have drained insurance companies of their reserves, many have withdrawn from the California market.

In a September 2023 statement, California Insurance Commissioner Ricardo Lara announced new rules for the industry, to be implemented by the end of 2024, that require insurers to write at least 85 percent of their policies in high-wildfire-risk and “underserved” communities, as part of what the state is calling its California Sustainable Insurance Strategy, which aims to expand insurance options in the state.

He also announced a new regulation on March 14 that would ease a restriction on insurers that prevents them from using forward-thinking models to set rates. In 1988, California passed a measure that required insurers to use data based on the past 20 years to set rates.