Orinda Homeowner’s Insurance Woes Resume
Orinda homeowners continue to feel repercussions of the increased wildfire risk on their homeowner’s insurance policies three and half years after the 2017 wine country wildfires.
The 94563 zip code temporarily benefited for one year after an emergency declaration from a directive prohibiting insurance cancellations if the cancellation is “based solely on the fact that the insured structure is located in an area in which a wildfire has occurred.” That moratorium no longer applies to Orinda, as of the end of October. The resumption of cancellations has caught some residents off guard.
While Orinda is caught in an industry-wide trend, Nationwide and Farmer’s are among companies that have most recently sent non-renewal notices to some Orinda homeowners. These non-renewal notices shock many recipients, though it is not a reason to panic; there are still some carriers dedicated to providing coverage such as the State’s largest carrier, State Farm.
“That’s one of the reasons we are still writing new business in California where a lot of carriers aren’t,” says Orinda State Farm agent Bryan Silviera in reference to the firm’s California presence. “State Farm has been in business for 99 years, and they’ve never been a business that has non-renewed due to location. When a State Farm customer is a customer, they are very loyal.”
Silviera noted that the El Toyonal and areas near Briones were some of the first neighborhoods to see non-renewals from competitors, due to proximity to nature and the risk of northerly winds. Now he has seen competitors non-renew in all parts of town.
Companies that haven’t sent out non-renewal notices have had to pay for higher risks with premium increases; even State Farm increased rates by a relatively modest 6.9% in 2020 to account for the higher risk of fire.
Orindans have also generally seen their premium costs increase due to higher coverage needs resulting from significant regional construction cost increases. For example, if construction costs increase by $100 per square foot, then a 2,000-square foot home should have $200,000 of additional homeowner’s insurance coverage.
These higher construction costs have compounded on the historical tendency of some national call-center based insurance carriers to underinsure Bay Area properties.
“Companies will sometimes undercut coverage just to get the business – they’ll quote you for $500,000 when you really need a million,” said Silviera of his competitors. “State Farm would rather insure the property accurately. I live here; these are my neighbors. I’m very conservative and always recommend an accurate replacement cost.”
Several companies, including AAA, were sued by wine country wildfire victims, claiming the company systematically underinsured them. Correcting underinsurance means more coverage for California homeowners.
For policyholders, this coverage increase is a third driver for higher premium costs along with higher risk and higher constructions costs. The only thing worse than that triple whammy, would be an uninsured or underinsured loss of your home.