California’s insurance crisis pales in comparison to other states

California’s insurance crisis pales in comparison to other states

So you’d think California has a serious home insurance crisis, with one company (State Farm) getting a 20% increase just as 2023 ends and others demanding even higher increases as some threaten to stop selling policies new to the state?

As big as this crisis is, it doesn’t compare to what’s happening in other states, like Florida and North Carolina, where Republican-dominated legislatures may soon be forced to take measures the GOP has long called ” socialist”.

Take Florida, whose Republican governor and former presidential candidate, Ron DeSantis, likes to seize on any trouble that arises in California, blaming everything from homelessness to high electricity rates on Democratic dominance of state government. .

Florida already has a state and federal insurance company called Citizen Property Insurance, which works much like the California Fair Plan. These agencies are funded primarily by exorbitant premiums paid by homeowners who, for a variety of reasons, cannot obtain policies from private companies.

In California, most of the problems are confined to specific areas that insurance companies think are at higher risk for wildfires, either because they’ve already had several or because their foliage, climate and terrain make them vulnerable to anything, from a lost match to arsonists to negligence by electric companies.

However, in Florida, where the largest wave of claims originate from hurricanes, there are no specific limits, since hurricanes have hit almost all parts of the state.

Home insurance costs there have skyrocketed without a law like California’s Proposition 103 of 1988 to curb them. The cost of home insurance in the Sunshine State recently saw the average Florida homeowner pay more than $6,000 in 2023 with more increases on the horizon. This was an increase of more than 102% over the past three years.

It doesn’t make up for the difference in home prices between California and Florida, but it does make real estate in Florida more expensive than prices and rents make it look. Type “socialism”. A total of 15 insurance companies have pulled out of Florida in recent years, so homeowners there are having trouble getting coverage.

Florida’s GOP-led Legislature is thus considering a big increase in the maximum value of homes that can be covered by Home Equity. The limit is now $1 million in assessed value, but lawmakers are considering cutting it in half to $1.5 million. That would leave very few homes in Florida unfit.

DeSantis suggests making up for all of this with lower property taxes, which are much higher than California’s because Florida doesn’t have restrictions like those in that state’s Proposition 13. two of them are now the main sponsors of the current expansion plan.

Things aren’t as extreme in North Carolina, but homeowners will be hit almost as hard as in Florida and much harder than in California. Insurance companies haven’t left North Carolina en masse yet, but some are now demanding between 42 and 99% increases in annual premiums. Increases could be even higher in the hurricane-prone eastern areas of that state.

Those levels of the proposed increase would spark major protests in California, where the advocacy group Consumer Watchdog — whose founder, Harvey Rosenfield, wrote Proposition 103 — is now working to reduce State Farm’s 20% rate hike. which seems small compared to what is happening elsewhere.

It’s a case of a serious crisis in California with much worse counterparts in other states. Yes, California has weather-related disasters, but when they happen in Texas and Florida, they can be even more devastating than ours.

In addition, insurance companies have had it easier here since they used their losses from the 1994 Northridge earthquake to end their obligation to write earthquake insurance. Instead, the California State Earthquake Authority has been lucky for nearly 30 years, getting huge bonuses from property owners without experiencing any truly massive shaking since Northridge in 1994.

This has allowed its stock to accumulate more than anyone could have expected in the 1990s. All of this is just another example of why leaving California doesn’t necessarily lead to the trouble-free existence that many immigrants expect in other states.

Email Thomas Elias at [email protected] and read more of his columns online at

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