Will California Fires Raise Insurance Prices?

It is sad but somewhat amazing to me when I see the news coverage of the California fires ripping through homes. This force of nature is something that insurance companies have to try to predict constantly. Fortunately, there are insurance underwriters that make their money by predicting such risks so there is money available when it happens. So, accordingly, there will not be any "insurance scare" from these California fires.

That does not mean that eventually insurance companies will review their risks in California and increases may be in the future. Allstate already announced earlier this year that they would be pulling out of the state all together. Fortunately, there are plenty of insurance companies that plan to stay in California. They are asking more from their customers though and offering less. Most all insurance companies have required homeowners to remove brush around their homes or risk loosing their coverage. And, after the fires in 1991, insures stopped offering replacement value policies.

Just as California will once again rebuild, so will the insurance companies recover. Yes, as with all added disasters, we may eventually see rates rise but fortunately, the smart people that work behind the scenes in insurance are right now calculating risks for the future to make sure the disasters in the years to come are being paid for now.