No-Notice Property Insurance Wildfire Cancellations

NOTICE: If your homeowner’s or renter’s insurance for property located in California was cancelled without notice, contact the Arnold Law Firm at (916) 777-7777.

According to the California Department of Insurance, hundreds of thousands of homeowners in high fire-risk areas are suddenly losing their insurance in response to widespread wildfire damage in recent years. Some are reporting that their insurance company failed to properly notify them of this policy cancellation.

As of July 2020, California insurance companies must provide notice a minimum of 75 days before the expiration of your policy and must provide specific reasons for nonrenewal.

After a policy has been in effect 60 days or more, the insurer is restricted from canceling a policy before the end of the policy term except for limited reasons, including physical changes in the property that make it uninsurable. Insurance laws allow insurers to set their own eligibility guidelines that apply to decisions to cancel or decline coverage. However, those guidelines must be objective factors that are substantially related to risk of future loss.

Insurance companies use a formula called a FireLine score to determine the fire risk of a home and whether to offer a fire insurance policy and at what price. They use digital mapping technology to determine how a specific property is impacted by three primary factors that contribute to wildfire risk:

• Fuel — Grass, trees, and dense brush feed a wildfire
• Slope — Steep slopes increase the speed and intensity of wildfire
• Access — Limited road access and dead ends impede firefighting equipment

State law requires insurers to wait at least a year before dropping a policyholder who lives in or near an area where an expansive wildfire occurred. Another law gives a two-year reprieve to homeowners who suffered a total loss to their property from a wildfire.

Even after many years with the same insurance company, many policyholders are now scrambling to get replacement coverage, often at up to four times the cost — if they are lucky enough to find a traditional provider. Some homeowners are forced to utilize the California FAIR Plan, a last resort option. The California Fair Access to Insurance Requirements (“FAIR”) Plan is a non-government insurance pool created in 1968 to make basic property insurance available for properties denied insurance in the voluntary insurance market.

If your homeowner’s or renter’s insurance for property located in California was cancelled without notice, contact the Arnold Law Firm at (916) 777-7777 to discuss your situation and possible developing legal options. Our attorneys have extensive experience pursuing wildfire-related cases and resulting insurance matters, including the 2018 Camp Fire in Paradise, California.