Hopefully this situation does not arise in the Philippines especially for Catastrophic Perils.
Last year, Francis Bischetti said he learned that the annual cost of the homeowners policy he buys from Farmers Insurance for his Pacific Palisades home was going to soar from $4,500 to $18,000 — an amount he could not possibly afford.
Neither could he get onto the California FAIR Plan, which provides fewer benefits, because he said he would have to cut down 10 trees around his roof line to lower the fire risk — something else the 55-year-old personal assistant found too costly to manage.
So he decided he would do what's called "going bare" — not buying any coverage on his home in the community's El Medio neighborhood. He figured if he watered his property year round, that might be protection enough given its location south of Sunset Boulevard.
It wasn't. The home he lived in for nearly all his life burned down Tuesday along with more than 10,000 other homes and structures damaged or destroyed in the worst fire event in the history of Los Angeles. Sixteen deaths have been confirmed countywide.
"It was surrealistic," he said. "I’ve grown up and lived here off and on for 50 years. I’ve never in my entire time here experienced this."
Farmers Insurance declined to comment, saying it does not discuss individual policyholders.
A train wreck coming down the track'
Bischetti was far from the only homeowner living in Pacific Palisades, Altadena or other fire-prone hillside neighborhoods who struggled to maintain their insurance amid sharply rising costs and the decision by many insurers to reduce their exposure to catastrophic wildfire claims by not renewing the policies of even longtime customers. Many fire victims reported that insurers had dropped their policies last year.
The fires — expected to be among the costliest natural disasters in U.S. history — have deepened a crisis in the state's home insurance market that was already reeling before the devastation came.
The state's largest home insurer, State Farm General, announced in March that it would not renew 30,000 homeowner and condominium policies — including 1,626 in Pacific Palisades — when they expired.
Chubb and its subsidiaries stopped writing new policies for high-value homes with higher wildfire risk in 2021. Allstate has stopped writing new policies in 2022, and Tokio Marine America Insurance Co. and its subsidiary Trans Pacific Insurance Co. pulled out of the state last year, though Mercury Insurance offered to take their customers.
Liberty Mutual was sued last month by a homeowner who accused the insurer of dropping her over a bogus claim that her roof had mold damage.
“Driven by a desire to maximize profits, property casualty insurance companies ... have engaged in a troubling trend of dropping California homeowners’ insurance policies like flies,” said the complaint, filed in San Diego County Superior Court. A spokesperson for Liberty Mutual declined to comment on the litigation.
The inability to get coverage is reflected in the number of policies picked up by California's FAIR Plan, which as of September had about 452,000 policies, up from a little over 203,000 four years ago. FAIR Plan's website says its claims exposure is nearly $6 billion in Pacific Palisades alone.
"The situation has been a train wreck coming down the track for a while," said Rick Dinger, president of Crescenta Valley Insurance, an independent brokerage in Glendale.
Source: yahoo.com
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