Title: California Reconsiders Its ‘Matchstick’ Problem: Who Pays for Losses in a Land of Wildfires?
Posted on February 14, 2025
Original: https://www.nytimes.com/2025/02/14/realestate/la-fire-home-insurance-legislation.html
In the aftermath of California’s devastating 2021 wildfire season, lawmakers in Sacramento are considering a proposal that could provide relief for property owners who have seen their homeowner’s insurance premiums skyrocket due to increased wildfire risks. The proposed solution, known as the “Catastrophe Reduction Plan,” would establish a state-backed reinsurance program to help insurers offset their losses during times of extreme wildfire events.
Currently, many Californians who live in high-risk fire zones are being charged exorbitant premiums by their insurers, who argue that the costs of wildfire damages are simply too high to bear alone. Some property owners have even been dropped by their insurers altogether, leaving them without any coverage for a natural disaster that could wipe them out financially at any moment.
The Catastrophe Reduction Plan aims to address these issues by offering insurers a new source of funding that would help them recoup their losses after a major wildfire event. By providing a buffer against extreme losses, the state is hoping to ensure that insurance policies continue to be available to Californians, even in the face of increasingly volatile wildfire conditions.
At the same time, lawmakers in Sacramento are also working on another initiative that would provide financial assistance to homeowners who are struggling to pay for costly fire safety upgrades to their properties. Under this proposal, the state would provide grants to eligible property owners who can demonstrate that they have taken specific steps to reduce their wildfire risks.
This new program, which is being called the “Land-Use Matching Grant Program,” would offer funds to homeowners who have invested in fire-resistant landscaping, hardened the roofs and exterior walls of their homes, and installed other safety features such as fire-retardant window coverings. These upgrades would be used to create “matching” funds from the state that would help offset the costs of the improved safety measures.
Both proposals are part of a broader effort by California’s lawmakers to address the issues of wildfire risk and homeowner’s insurance that have plagued the state’s housing market in recent years. While the specific details of these proposals are still being negotiated, both the Catastrophe Reduction Plan and the Land-Use Matching Grant Program have the potential to offer much-needed relief to Californians who are struggling to manage the costly and often uncertain risks associated with wildfire events.
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