California to require insurance discounts for property owners who reduce wildfire risk
The Golden State is poised to become the first state to require insurance companies and other types of companies to offer homeowners and renters discounts for reducing their wildfire risk.
California Insurance Commissioner Dave Jones announced Thursday that the state’s insurance carriers must offer discounts to reduce the cost of property insurance in California from 10% to 3% for homes and 5% to 25% for the homes and businesses they insure.
Jones said it will be “a major incentive to reduce the severity of wildfire risks across all of our state.”
The new law would apply to any property owner or tenant who “successfully reduces wildfire risk.” The law would also apply to any company that sells insurance within the state, including life insurance, auto insurance, homeowners insurance and business insurance.
Jones cited a report from the National Academy of Sciences that estimated the average California home would need $45,000 in repairs after wildfires and that the cost to avoid those costs was $2,600. He said that figure would be reduced by the law to $1,200.
“This is an effective way to reduce insurance costs for homeowners and businesses in the state of California, and that’s exactly what we want in this state,” Jones said. “This is a simple and straightforward way to reduce insurance costs so that when a disaster strikes in California, homeowners and businesses can be confident that they and their loved ones will be able to get the care and support they need.”
California would be the third state to mandate insurance discounts for reducing wildfire risk: In New Mexico, insurance carriers must offer discounts for reducing a home’s wildfire risk. In Hawaii, insurance companies must offer discounts for reducing a property’s insurance premiums after a wildfire.
Jones said he would consider making the law permanent as a way to reduce insurance costs to consumers and to make insurance affordable for more Californians.
“It’s very important to have a permanent way for California to reduce the cost of insurance for homeowners and businesses, and I will be looking at ways to make this law permanent,” Jones said.