California has announced that Allstate can raise home insurance premiums by 34% starting in November.
The move follows State Farm’s announcement that it will raise rates by 20%. Deputy Insurance Commissioner Michael Soller explained that California’s insurance premiums are still lower than many other states despite the increase.
“California insurance rates are lower on average than a lot of other states, including big states like Florida or Texas,” he said. “We’re seeing the impact of disasters. Not just wildfires, but winter storms — we’re seeing the impact of climate change all across the country. So we’re not alone.”
Devastating fires are a big part of the increased cost of homeowners insurance. The state said it is taking steps to ensure that homeowners receive discounts if they take mitigation measures. While rates are rising, not everyone will see the same increases.
“An insurance rate is an average in the state,” Soller said. “That doesn’t mean that’s what you’re going to pay. Because of the factors that go into your insurance premium, the amount you pay each year really depends on your property.”
In addition, companies look at the characteristics of the home and the measures that need to be taken to prevent damage from forest fires.
“It’s not a good deal by any means, but we got as much as we could,” said Jamie Court, a spokesman for Consumer Watchdog. “Part of the problem was that this rate hike had been going on for over a year.”
The organization helped negotiate the new rates. Court added that it wasn’t a good deal, but he’s glad residents at least have insurance.
“The company had a lot of costs that they had to recoup,” he said. “They’re still making a nice return on it.”
State officials are urging people with questions to contact them if they feel they are being treated unfairly.
“We always want people to know that if they have any questions about their insurance policy, if they have received a notice that their insurance will not be renewed or if they want to know why their premiums are going up, they should contact the Insurance Department,” Soller said.
State officials say they are working to prevent providers from terminating their insurance contracts with homeowners.
Tom Wait
