The devastating Los Angeles County wildfires, with estimated insured losses reaching $20 billion, are exacerbating California's existing insurance crisis. Many are being forced to the California Fair Plan, which offers limited coverage and caps payouts at $3 million, a figure insufficient for many homes in the Bay Area. This is raising concerns about the future of the housing market, with potential price stagnation, limited buyer pool, and disincentives for homeowners to invest in their properties.
ByAs wildfire victims are forced to the California FAIR Plan, new concerns are being raised about its coverage caps & the impact on the housing market.The estimated insured losses from the Los Angeles County wildfires could reach $20 billion, which would be recorded as the costliest fire in U.S. history in that category, according to J.P. Morgan.
"There's no question there's going to be a lot of people impacted by this fire where their insurance falls short," said Amy Bach, with United Policyholders. "People already can't get insured as it is now and you can't get a loan without a policy in California."Canlas says his company has already seen a hit from the insurance crisis.
"We're already seeing the highest interest rates we've seen in a long time... the Fed has already said they're going to drop their rates twice in 2025, probably only about a quarter point each drop -- so then we're looking at higher prices, still-high interest rates, and insurance policies being extremely high or not available," Canlas added.
Bottom line, if you're lucky enough to get a private insurance policy, analysts expect premiums to go up as high as 40% on average, even if you don't live in a high-risk area. If you do, that figure could be up to 100% or more. That's according to data compiled from several insurance advocacy groups and a recent survey out of Florida from real estate brokerage firm RedFin. California is in the process of implementing similar insurance regulations that Florida has enacted.
CALIFORNIA WILDFIRES INSURANCE CRISIS FAIR PLAN HOUSING MARKET PREMIUMS
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