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California senate committee addresses condominium insurance crisis

Farmers Insurance recently canceled insurance on 1,000+ condos in San Diego. CBS 8 spoke with condominium owners whose policies were dropped due to wildfire risk.

SAN DIEGO — The solution to the wildfire insurance crisis in California may be higher insurance rates for all homeowners - that's what industry experts had to say while testifying last week in front of the California Senate Committee on Insurance.

CBS 8 has been Working for You, talking to condominium owners whose policies have been dropped due to wildfire risk.

Over the past six months, Mira Mesa condo owner Paula Southwick has written about 20 letters to politicians, the governor, and even the President of the United States.

“I tried to cover anyone I thought might influence the situation,” said Southwick.

Farmers Insurance recently canceled its policies covering more than 1,000 condos in San Diego due to wildfire risk, including 240 condos in the Canyon Park Villas where Southwick lives.

The Canyon Park Villas condo association was able to cobble together a much more expensive policy on the surplus market, leading to an increase in monthly HOA fees and a huge special assessment on every owner.

“We have to pay $2,500 to cover the increase from $47,000 to $600,000 yearly in our premiums,” said Southwick.

Last week, Southwick finally saw a sign that her letter-writing campaign might be paying off.  She saw condo owners testifying before the California Senate Committee on Insurance in Sacramento.

One of the owners who testified, Lisa Meyer, also saw huge increases in her HOA fees after the policy on her 186-unit complex in Santee was not renewed.

“What makes me most scared is I’ve had recent discussions with our broker and industry experts, and the prediction is that it will be even worse for our next renewal,” Meyer testified.

The committee heard from Victoria Roach, the president of the California FAIR Plan, safety-net insurance of last resort, which currently cannot cover large condo complexes because the policies needed are above the FAIR Plan maximum.

The FAIR Plan is backed financially by private insurance carriers in California.

“Who's going to pay?  These insurance companies don't have a bucket of money they can pull from absorb.  Right?  Eventually, that money will trickle down to the policyholders in higher premiums,” Roach testified.

If a solution is not found soon, Southwick worries people will start losing their condos.

“This will eventually lead to homelessness and add to the housing crisis,” Southwick said.

The state insurance committee hearing was informational, so no vote was taken.

State Insurance Commissioner Ricardo Lara recently tweeted, “Expanded coverage options for HOAs and community associations, including a stronger FAIR Plan, is a top priority for my new term.”

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