Opinion: California must take action to solve its homeowners insurance crisis

The devastation of the fires in Los Angeles has been hard to fathom. Thousands have lost their homes, priceless personal items, memories, and in some cases the very neighborhoods where they lived most of their lives. Some have even lost their lives.

And in the aftermath, we will be left with a problem that will impact millions of Californians: California’s collapsing market for home insurance.

Reports say that 1,600 people in the Pacific Palisades were kicked off of their insurance last year because it’s simply too expensive for insurers to cover some of these homes. California has a backstop plan, the FAIR plan, that is available to homeowners who can’t get insurance from any private insurers, but the FAIR plan likely does not have the funds to pay out even the damages from the fires of this past week, let alone future fires or other disasters to come as dangerous weather incidents continue to increase.

If we start seeing Californians without homeowners’ insurance losing their homes and getting no help from the state, the costs could be catastrophic. About a third of all of Californians’ savings are in home equity. For many California homeowners, especially seniors who live on fixed incomes, virtually all of their savings are in their house. The collapse of our home insurance system could lead to a 2008-style crash in housing prices that could devastate the state’s economy.

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