Like single-family homeowners in California, landlords are facing higher insurance premiums, too. And they’re passing along some of those costs to their tenants.
Many insurance companies have stopped writing policies in the state because of increased wildfire risks, but that’s not the only reason. They say in the case of any catastrophe, the potential costs of replacing any residential or commercial property, from labor to material costs, is just plain more expensive now. So even owners of properties in areas that are not at high risk for wildfires have had their policies canceled because their buildings may need repairs or improvements.
When State Farm canceled the policy on their San Gabriel property, Placido got a quote from the FAIR Plan for $8,600, much higher than their old $2,600 premium. Instead, he was able to cobble together three different policies from a Florida-based insurer to get the coverage the old policy provided for $6,500, a 150% increase. So he said he plans to raise rents in January.
“Tenants are going to have the least recourse,” Singh said. They “always end up bearing a disproportionate brunt of what they can afford.”Singh and others who deal with California’s lack of affordable housing expressed concern about whether certain parts of the state will eventually be uninhabitable and uninsurable — whichever comes first.
Laurie Johnson, an urban planner and former chief catastrophe response and resiliency officer for the California Earthquake Authority, pointed out that some property owners in the state who own their buildings and have no mortgages might choose not to insure their properties because of the rising costs. That’s worrisome, she said.
The growing risks of climate change make it more important than ever for renters to have their own insurance, said Emily Rogan, senior program officer for United Policyholders, a consumer advocacy group.
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