Malibu Fire Victims Bemoan Insurance Hikes: "It's Just Plain Wrong"
With skyrocketing insurance rates leaving homeowners struggling to recover, others are spending big on "gold-plated" policies with an emphasis on prevention.
After November's Woolsey Fire, producer Paul J. Morra was feeling lucky: His house in Corral Canyon was damaged but still standing. But then his insurer suddenly dropped him and he learned his premium would skyrocket: from $7,700 to $33,000 annually. "The insurance companies are taking advantage of a situation and it's just plain wrong and immoral," says Morra. "I don't know how people are going to be able to stay in their homes."
Talk to a Malibu homeowner and you're likely to hear similar concerns. Wildfire-related insurance losses from the November blazes have surpassed $12 billion, and the California Insurance Commissioner's office says it has received 147 formal complaints from residents of Malibu and the surrounding areas regarding policy-related issues.
Since the fire, multiple carriers have pulled out of the region. Others are requiring new preventive measures (like regular brush clearing and the use of fire-resistant materials) for coverage. And almost all of the carriers still offering policies have jacked up rates. Premium surges like the ones hitting Malibu aren't entirely new. But according to experts, the increasing frequency and intensity of fires has laid bare how regular insurance policies may not be enough anymore — especially in pricey zones like Malibu.
The solution: "gold-plated" policies. Some of the most popular of these high-end offerings come from Chubb Masterpiece and the Private Client policies of Nationwide and AIG. And though they can cost anywhere from 30 percent to 50 percent more than a regular policy, they often help avoid disruption in service and dramatic price spikes after fires or other disasters. According to Rick McCathron, chief insurance officer for Hippo Insurance, these policies don't necessarily come with exotic bells and whistles. What you get is more attentive and predictive services. "The gold-plated policies are the ones that proactively take care of you by constantly evaluating your home," accounting for factors like home additions, projected construction costs and surge pricing. "All of this helps avoid situations where a client is under-insured," says McCathron, "which is a common occurrence."
This story first appeared in the June 19 issue of The Hollywood Reporter magazine. To receive the magazine, click here to subscribe.