Wildfire safety: Some Orange County homeowners getting dropped by fire insurance providers

BREA, Calif. (KABC) -- It's an insurance nightmare and a potential disaster. Some Orange County homeowners are losing their fire coverage, and insurance companies are telling them they have no choice.

Some of those homeowners include those living in Olinda Ranch who say they've been dropped by their fire insurance providers.

Randy Butler said he has lived in Olinda Ranch for 15 years with the same insurance, the Automobile Club (AAA), but he got a letter at the start of the year. Now he wonders if another one will come.

"It's just always in the back of your mind. It just will come at an inconvenient time. We got the letter in December, and in January we're dropped - gave us six months," Butler said.

According to the Insurance Information Institute, providers need to give at least a 45-day notice.

Ronald Biang, who also lives in Olinda Ranch, said he heard two months before getting dropped.

"We were fortunate enough to get another insurance company that took us over at a little higher rate, but at least we have insurance. It's hard to have a house without insurance," Biang said.

According to the California Department of Insurance, about 10,500 homeowner fire insurance policies were dropped in Orange County in 2018. Two hundred of those were in Brea alone. That's a 6% increase from the previous year for the county and a nearly 30% jump for the city of Brea.

The Corporate Communications Manager with AAA of Southern California, Jeffrey Spring, sent the following statement to Eyewitness News:

The Auto Club has been providing insurance services to members for more than 100 years. We want to continue offering home insurance at competitive rates for the long term, and to responsibly achieve that long-term goal, we must periodically take steps to mitigate our exposure to catastrophic risk. In California, that means mitigating our exposure to wildfires.

Although the risk of fire has increased over the years in many California communities, we have continued to offer home insurance in the state. Over the past few years, we saw a need to re-evaluate our exposure to future catastrophic fire events. Based on that evaluation, we must take steps to remove homes that present the highest exposure to wildfire.

The Auto Club is taking a measured and thoughtful approach in our assessment. We are identifying only the very high-risk homes to be non-renewed based on physical proximity to brush. We use a combination of aerial and physical inspection photos which includes identification of surrounding brush vegetation.

As we identify homes for non-renewal, we are offering alternative coverage with a carrier through our in-house agency as well as assistance in securing a policy with the FAIR Plan.

This process began in 2018 and is nearly concluded. Less than 1% of our current home policies were not renewed with us and coverage placed elsewhere.

Mercury Insurance is one of the companies picking up some dropped policies. Victor Joseph, the chief underwriting officer with Mercury Insurance, sent the following statement:

Mercury Insurance is taking a prescriptive approach to wildfire risk. Unlike many other insurance companies that are looking at fire risk only at a macro level and cancelling policies within entire zip codes, Mercury is looking at each property individually to assess risk. This means that many customers may qualify for coverage that other companies may reject. We don't believe in the one size fits all model, because each home is unique. If homeowners have taken the proper steps to help reduce wildfire risk, such as building with fire retardant materials, clearing brush away from structures, trimming trees and maintaining landscaping, among other things, then Mercury will consider those factors when we assess each individual home's risk.

Biang said if it got to the point where he couldn't be insured, he'd have to leave.

"I don't know how I'd sell the house if you can't get insurance for the new owners," Biang said.

Santa Ana winds are expected to pick up here later this week increasing the threat of wildfires.
Copyright © 2019 KABC-TV. All Rights Reserved.