Insurance companies in California will have to provide coverage to homeowners in wildfire-prone areas under a new state regulation announced Monday.
The new ordinance aims to give residents access to more insurance options afterward companies withdrew reporting from different areas.
Insurance companies will be required by law to write policies in those areas “equal to not less than 85% of their statewide market share.” Coverage will not immediately increase to that threshold. Instead, companies will be required to increase their salary by 5% every two years.
“Californians deserve a reliable insurance market that doesn’t pull away from communities most vulnerable to wildfires and climate change,” said California Insurance Commissioner Ricardo Lara.
Coverage will not immediately increase to that 85% threshold. Instead, companies will be required to increase their salary by 5% every two years.
The regulations are the latest in Lara’s Sustainable Insurance Strategy. Lara previously announced that companies would be allowed to use catastrophe models and climate change to set higher rates.
According to Lara, the use of catastrophe models will ensure ‘reliable rates’.
“Under the historical data system, insurance consumers pay balloon premiums and rate spikes after major wildfires, without increasing availability,” the press release said.
The requirement to cover wildfire-prone areas was the latest step in Lara’s Sustainable Insurance Strategy.