California Wildfires & Insurance: Are You Covered or Scammed?

Summary

The video covers a detailed discussion about California wildfires and insurance implications, hosted by Karl Susman on Insurance Hour. The host provides critical information about consumer protections, including protection against non-renewal for 12-24 months in wildfire-impacted areas. He warns about numerous scams targeting wildfire victims, including fraudulent contractors demanding upfront deposits and fake federal assistance offers. Susman explains that legitimate federal assistance is available through disasterassistance.gov, with FEMA offering grants up to $100,000 and SBA providing loans up to $2 million at 4% interest over 30 years. The host also discusses the California insurance market crisis, explaining how regulatory constraints and increasing natural disasters have led to insurance companies leaving the state. He notes that California, despite its high-risk profile, ranks as the 10th least expensive state for homeowners insurance, which has created an unsustainable situation for insurers.

Highlights

Consumer Protections and Non-Renewal Rights

Karl Susman explains that homeowners in wildfire-impacted areas have protection against non-renewal from insurance companies for 12 months, extending to 24 months for total losses. Adjacent areas receive one-year protection. He directs viewers to insurance.ca.gov to verify their protection status and emphasizes the need to actively communicate with insurance companies if receiving non-renewal notices.

Wildfire Scam Warnings and Federal Assistance

The host warns about various scams targeting wildfire victims, including contractors demanding upfront deposits and fraudulent federal assistance offers. He emphasizes that legitimate federal aid is available through disasterassistance.gov, with FEMA offering grants up to $100,000 and SBA providing loans up to $2 million at 4% interest over 30 years.

Insurance Policy Management During Displacement

Susman advises on managing insurance policies while displaced, recommending setting up a PO box for mail, putting policies on auto-pay, and understanding coverage extensions. He explains that some companies allow liability coverage to extend to temporary residences and may permit reduced coverage on original properties during rebuilding.

California Insurance Market Crisis and Regulatory Changes

The host discusses the California insurance market crisis, explaining how strict regulations and increasing natural disasters have led to companies leaving the state. He highlights new regulations (Sustainable Insurance Strategy) implemented in December 2024, designed to modernize the 30-year-old laws and potentially attract insurers back to California.

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Transcript

0:03

Buckle up, everyone. You are strapped in and ready for Insurance Hour. With me, your host, Karl Susman. Informing, educating, and entertaining one policy at a time, this is Insurance Hour. Hello, hello. This is Insurance Hour. I am your host, Karl Susman. Our continued coverage on the California wildfires begins now. Our phone lines are not being manned because we are going through your questions today, but you can still call or text your questions in. The number is 559-656-0317, or you can send your questions in by email to Questions@InsuranceHour.com. A big hello to our new friends over at KEIB Radio. We are glad to be here. Let's jump right in and talk about these wildfires. The first thing I want everyone to be aware of is that there are consumer protections that are out there that you might not be aware of. So let's talk about those first things first. Now, as you can imagine, many people have insurance policies. Those insurance policies are contracts. However, the Department of Insurance does have the ability. Well, I suppose, ability or not, they will give decrees of some changes to what those existing insurance policies and or contracts, however you want to look at them, are in the event that they feel that it is in the public interest to do so. And here is the example that I want you to be aware of first. If you are in an area that has been impacted by a wildfire, chances are you may not be able to be non-renewed by your insurance company. I know that sounds strange because insurance companies are private companies, but the Department of Insurance does have that ability to turn around and say, listen, we want you to do XYZ. And in this case, if you are in an area that has been impacted by the wildfires, then you have protection against non-renewal for at least 12 months. Now, if it turns out your home was a total loss, then you have protection for up to 24 months. Two years. Now, it doesn't stop there. If you are in an area that is considered adjacent to these areas, you also have protection for up to one year. Now, if you're not sure if your home is in a protected area or not, you can go to the website for the Department of Insurance. There's a link for you to put in your address and it will tell you right then and there what you are eligible for. That link is at insurance.ca.gov. Once again, that's insurance, all spelled out,.ca for California.gov. Insurance.ca.gov. Put your address in there and you can find out if your home is in a protected area and if so, for how long. Now, understand that just because the Department of Insurance comes out and says that, it doesn't all of a sudden just happen automatically. The industry has to still basically work through the system to do that. So, it's entirely possible that you might still receive a non-renewal notice, in which case you simply call your insurance company. or call the agent or broker, whatever the case might be, and say, hey, I checked with the Department of Insurance. I'm in one of those areas you can't non-renew me, and they will hopefully do the right thing and lift that non-renewal. Again, don't expect it to just happen automatically. Be sure you take that step if you've checked and you are in a protected area that you let the carrier know in the event you do receive a non-renewal. That's a big one. Another thing to be aware of is what do you do if you were actually impacted by these wildfires? You are no longer in your home. Now, there are multiple steps that you're going to want to take, but before I get into those, I want to be sure you're aware of a few things that I've seen come up that are, that are just, there's no way to say it other than just they are tragic. There are scam galore going on out there. I mean, the scammers are coming out of the woodworks. I want to give you just a few highlights of things to be aware of, to look out for, because I'm seeing this probably every couple of days. And if I'm seeing it, it's not just me. It's definitely out there. The first thing you might find is that contractors or people that are claiming to be contractors are coming out of the woodworks and they're saying, hey, it's going to be a long time before we rebuild, but if you sign this contract with me, give me a deposit, I'll put you further up the list. And the larger your deposit is, the further up the list I'll put you. Now, that's not legal as far as I know. Again, disclosure, not an attorney, but I am pretty sure you cannot do that because effectively you are having a customer sign a blank check because there's no bid on that contract. There's nothing on there that says what it will cost to rebuild. You're basically just promising them to use them when the time comes and you're giving them money upfront. So if you're given a contract and told you need to sign this right now, right now, it's a good red flag. Anytime you're being rushed, there's probably a reason and it's probably something you want to be careful of. Talk to an attorney, talk to someone, have other people look at it and decide, is this legit or not? Another scam that I'm seeing happen are people are getting contacted by organizations or people claiming to be with the federal government. Now, as a side note, you should know that the federal government does not just randomly text you or call you and offer you money. I know it might seem like that sometimes, but in fact, that does not happen. That's not a thing. Normally, if you are going to be looking for aid in some form, whether it be in the form of a grant from FEMA or a loan from the SBA, the Small Business Administration, then you will reach out to them first. After you've reached out to them, they might then contact you by email or by cell. As a side note, if you are looking to get disaster assistance, the place to go is disasterassistance.gov. Don't go anywhere else. disasterassistance.gov. Any other website? And there are ads popping up all over the place that are purporting to be with the feds offering you help are usually scams. So just go to the source. Remember again, disasterassistance.gov. That's where you wanna go. Now, while we're talking about that, keep in mind that the government is offering two types of general assistance. One is in the form of grants. That's where they basically hand you money. And that's through FEMA. Depending on your situation, whether it's a residential loss or a commercial loss, you could be looking at anywhere from around $40,000 to maybe $100,000. If you are looking for a loan, then the SBA is usually giving depending again, if it's a residential or commercial property, if it's a nonprofit, there are some other categories in there, but in the neighborhood of about $2 million. Now remember, this is not a gift, this is a loan. So it's going to be a low interest loan. I believe they're offering 4% amortized over 30 years. So it's basically like getting a new loan effectively. So if it turns out that you are looking to get some money and you can check with FEMA for grants and you can check with the SBA for loans, that's something that is out there and available. Keep in mind also, a loan does have to be paid back. That's not free money. It might be low interest money, but it's not free. And another thing to keep in mind is that you are able to collect from the feds as well as your insurance policy. Now the feds may ask what type of insurance you have and it may impact the grant aspect, that's the free money, but the loans are not going to typically be impacted by you having insurance or what the insurance policy may or may not be paying out. All right, a lot of information we stuffed into this first segment. Let's take our first quick break. And when we come back, we're going to go over some more information of things you need to know whether you were impacted directly by these wildfires or not. This is insurance hour. I am your host, Karl Susman. We will be back in 60 seconds, answering your questions, giving. advice, all that other good stuff. So sit back, relax, and we will be back in a flash. Stand by. Let's talk about earthquakes for a minute. Look, we know we live in earthquake country here in California. Powerful, devastating earthquakes have happened here before, and science says that they will happen again. They can't tell us exactly when. They can just tell us that it is going to happen. Count on it. Prepare for it. Did you know that earthquakes are not covered by your homeowner's insurance policy? You need a separate policy to give you the peace of mind that you will be able to recover without getting financially wiped out the next time we get hit with a big one. There is a great company here in California that will provide you with earthquake coverage you need at a price you can afford. That company is GeoVera. I have a policy through GeoVera. I really like how easy it is to choose from all of their great coverage options backed by the financial strength that lets me know that they will be here for me when I need them the most. Go to getquake.com forward slash insurance hour to learn more. That's getquake.com slash insurance hour. Make sure you're ready for the day when the ground shakes again. Hello, hello. This is insurance hour. I am your host, Karl Susman. Thank you so much for being here today. The phone lines are not being manned because we are taking our special coverage on the California wildfires another day. But you can still call or text in with your questions. That phone number is 559-656-0317, phone or text. And you can send your questions in by email to Questions@InsuranceHour.com. Want to say a big hello to our new friends over at KEIB AM1150, the Patriot. We are glad to be here. Now, before I go on, I want to thank our sponsor, GeoVera Insurance Company. Now, GeoVera is an earthquake insurance company. That is what they do. And let me tell you something. When all of these fires happened, and all of these structures were lost, what do you think the insurance companies did when they cover you for earthquake insurance? Well, they're sitting there thinking, well, there's no structure left. What should we do? They could have done nothing, but companies like GeoVera did the right thing. And they turned around and they said, OK, anyone that wants to cancel their policy, which most would, of course, since there is no policy, there's no home to protect, they will cancel the policy, they will prorate the cancellation. And regardless of when you come to them, they will go back and cancel it retroactively to the date of the fire. First class move by GeoVera. And let me tell you, I've had my insurance with GEOVERE for decades. And you can probably figure every earthquake company wants me to have their policy. So I can say I have my policy with this company, but I've had it with GeoVera. The prices are right. The coverage is right. And now I can see after a disaster, they do the right thing. So again, GeoVera, we thank you for your support of Insurance Hour. And let's move on. All right, we were talking about some scams and some things to look out. And I can't tell you how frustrating it is for me when I hear these stories because people that are that have had a loss are Already at a low point. They've left their home and they're not able to go home because it actually is not there any further So to think that someone is taking an advantage of people at that time of all times It just it makes my skin crawl. So please please beware remember some of the rules Government officials do not text you and also if someone is being overly aggressive trying to get you to do something Chances are it's not on the up-and-up. So be on the lookout for that Okay. Next I've also had some people contact me saying that they're getting contact different people that are helping them quote-unquote helping them file their claims or assisting them with their claims and All they need is some information to be able to help them their name their address their date of birth Their social things like that and you can guess what happens next These people are crooks, and all they're doing is turning around and stealing their identity. It's also very easy to turn around and go to a credit card company, let's say, with all of this identity that you've just gotten off somebody who you claim to be helping, and tell the bank, Oh, you know what? I was involved in the wildfires. You can't mail the credit card to my address that you have on file, because, of course, that address doesn't exist right now. Here's my new address. There is an unbelievable amount of fraud going on. It is beware out there. I suggest you have a credit freeze put on your credit record reports. It's free to do. You can contact the credit bureaus directly, tell them you want to put a credit freeze. You can even do it online if you like, and you can have it either permanently put on, or you can do it for a period of time. But I strongly suggest people do that right now, because the amount of fraud we are seeing with identity theft is just going through the roof. Another thing they'll be on the lookout for, and we're seeing a lot of these are crowdfunding sites for people, you might see a might get an email that says, Oh, give money to this organization. It's for wildfire relief. And, you know, it might be something called like the Wildfire Relief Fund for Southern California dot com. I'm making that up, but it's something you might not have heard about before, but it sounds legit enough and you go and you give money. Well, guess what? A lot of those are pure and simple fraud. It takes all of about two minutes to set up a website, right? And all these people are doing are registering these names, setting up websites and spamming people, getting their money. They are taking advantage of the goodwill, the big hearts that most people have. Horrific. Horrific. All right, let's move on to the next thing. Also, I want you to be aware if you have been directly impacted that something you should be doing right away and some of these things might escape you because you just aren't thinking about it. There's so much to focus on. But what you can do is you can contact the county assessor's office and you can have them change your property tax amount. Yes, tax is our favorite thing. You can actually lower your taxes. or eliminate your property tax while you do not have a property on your location. So you can go to assessor.lacounty.gov and there will be a link there that you can click on. It will give you information about putting in your address, what happened, when did it happen, and it will walk you through exactly what you are eligible to do in order to have relief from your property taxes. Now my understanding is, again I'm not an expert specifically in this, but my understanding is that as long as there is not a property on that land, your property tax is either eliminated or substantially lowered. Living in California we know our property taxes, we know that they're not cheap, so to all of a sudden have that bill go away, super cool. Speaking of bills, it's important that you pick an address to have all of your bills go to, and I suggest you do not pick the Airbnb you're staying in, or your friend's house, or anything along those lines. people that have lost their homes and are going to have to wait for their homes to be rebuilt, this is going to be a long and painful process. People are not going to have their homes rebuilt in a year, probably not two years either. It's going to probably be two years plus. We're talking about the amount of work that needs to be done just on the infrastructure in a lot of these areas that is going to take a significant amount of time. So don't expect that, oh, just put a change of address in for, you know, a couple of weeks or a couple of months, it'll be okay. Maybe I'll use the office address or something like that. Don't do it. I suggest pick a PO box somewhere safe, put in that little change of address form to the USPS, let all of your mail go there and let it go there until your forever home is back together and you can go there and change your address again. And you know what? You don't know what happens in a couple of years. It may turn out that you decide that you're not going to move back there at all. You don't want to be in a situation where, number one, you're not receiving your mail right now. And number two, you have to change your mailing address more than once. It's bad enough you have to deal with this. Let's take care of the low hanging fruit and let's be sure you're at least getting your mail. Other than that also, with bills that you have, I strongly suggest with your insurance policy, you put those policies on auto pay. Give the company a credit card, give them your checking account, whatever you're more comfortable with. Make sure that your insurance policies do not lapse. They do not cancel. If you're in any of those areas, you do not want to be in a situation where you have to try and find insurance. Not now, not in the last several years, but especially not right now. And especially if your home is in one of those areas. We're going to talk a little bit more after the break about what type of insurance do you need while you are waiting for your actual home to be rebuilt. That's a big question. Do you keep the policy you have? Do you get another policy? Do you need more than one policy? Are you going to be getting a different policy than the one you had before? All of these and more we're going to talk about after this break. It's important you understand this. It's important you have the right information. Knowledge is power. It really is with insurance. You want to be sure you know what to do and you get what you need to get. This is insurance hour. I'm Karl Susman and we will see you in 60 seconds. Stand by. Ladies and gentlemen, boys and girls, in just a few moments, the window to the magic podcast show will begin. My name is Patrick. My name is Calvin. I'm Mouseketeer Greg. My name is Paul and I will be your guide through the wonderful world of Disney sound experiences. This show is a weekly trip into the world of the Disney theme parks and resorts, and this is the place where you get to use your ears to surround yourself with the magic. For your safety, please remain seated while listening to the WindowToTheMagic.com podcast. Maybe there's a name for this, something like, is not a concession. Please visit WindowToTheMagic.com for more information, or you can find us on Apple podcasts and in the iHeartMedia app. Hello, hello. This is Insurance Hour. I am your host, Karl Susman. Thank you so much for being here today. Our phone lines are not live. We are talking about the California wildfires, answering your questions, giving you tips. You can still call or text in your question. The number is 559-656-0317, call or text, or you can send an email to Questions@InsuranceHour.com. We're keeping all of that. We're going to be answering those questions in future shows, so go ahead, send those questions in. We will get to them, I promise. And a big hello to our new friends over at The Patriot at K-E-I-B-A-M 1150. We are thrilled to be here with you. On that note, let us continue our chat about the wildfires and the impact it has on everybody. We were talking a little bit about what type of an insurance policy do you need. So let's walk through the process. If you are impacted by the wildfires, and I keep using that for a lot of people, I keep phrase impacted. I don't just say you had a loss or you lost your home because there are lots of different levels of disruption that occur due to this wildfire. I'm talking about everything from the person that used to work at a house in an area that no longer exists. That person is impacted as well. It's not just the homeowner that no longer has a home. It's all of the businesses that were run in those areas as well. It's the people that worked in those businesses as well. The tail on this is long, long, long, long. So let's start with the person that for one reason or another either due to a partial loss or a total loss is no longer able to be in their home. Now it's important and this is not a hard and fast rule because every insurance company deals with this slightly differently. What happens when you leave your house is you're going to be living, we hope, somewhere else. And of course, you need insurance where you are. Some insurance companies will give you the option to extend liability, meaning the liability portion of your insurance policy, from your homeowner's policy, even though there's no home, to a temporary location that you are residing. In addition, they may give you the option to have a percentage of your personal property limit extend also. All right, what does that mean? That means let's say on your homeowner's policy, maybe you had $500,000 in personal property coverage, perhaps they'll say, all right, 10% of that will cover for you somewhere else. Some might give you 20%, some might give you the entire amount. It just depends. Now, another question you might have is, well, wait a second. If I had a homeowner's insurance policy and I no longer have a home, why do I want to keep paying that premium? And again, you want to check with your insurance agent or broker or the insurance company directly to find out what the best way is to deal with this. But in general, you're going to need to have or maintain some type of an insurance policy from the area that there was a loss at. What most companies are allowing you to do is significantly reduce coverage on that policy. For example, if you had coverage for, let's say, a million and a half dollars to rebuild your home, home's not there anymore, but you don't want to cancel the policy because you don't know if you'll be able to get another one, you have to have coverage somewhere else, whatever the case may be, they will allow you to drop that coverage down to either a percentage of what it was before. Maybe it's 10%, 20% or even lower just to be able to maintain that policy. And of course, you want to do this to save money. There's no reason to pay for a million and a half dollars in coverage when there's no house to protect. Also, you're not going to have to worry about obtaining a specific policy if you already have one that will extend to where you are. So your mileage may vary. Every insurance company is handling this a little bit differently. Some companies are saying, you know what? We want you to get a... a separate renter's insurance policy while you are renting. And the reason for this is they are renting somewhere and the landlord, the person they're renting from wants to be listed on that insurance policy. Well, homeowners insurance policies are not designed to have individuals listed on the policy, right? They're not designed for that because individuals are not usually additional interests on a property or even an additional insured even more so because they're just people. They're not usually the ones loaning money. They're usually banks and entities that do. However, renter's insurance policies are designed to list additional interested parties. That's someone that will get a copy of the bill if you don't pay it for your renter's policy. And it will also give them the ability to see the coverage that you have and be sure that it satisfies their lease, all right? So the takeaway is check with your insurance agent or broker, check with the insurance company, but be very poignant. Say, look, I am now living at XYZ Place. Do I need a separate policy or are you going to extend coverage from my existing policy? And then the follow-up to that is what changes can I make to my existing policy to save money on it until we reach such a point where I need to start increasing coverage again? That's an important note to also keep in mind. Remember, at some point you're going to need to rebuild your home. We hope that's the plan, right? Some insurance companies might say that your existing policy will provide the coverage you need, but remember, you just dropped that coverage way down to a low amount because there was no structure. So it is on you to reach back out and say, okay, I need to increase that coverage again because you started building. Also, some insurance policies will not cover you during reconstruction. You may need to get what's called a course of construction policy. It's a different insurance policy type altogether. Some insurance companies will let you simply make a modification. That's called an endorsement or a change to an existing policy. They'll let you make an endorsement to your homeowner's policy to turn it into a course of construction policy. Some may not. Some might say, nope, you need to buy a separate course of construction policy. Do not, N-O-T, capitalized, underlined, italicized, do not think that having your contractor or your architect or whoever they might be, carry their own insurance, which by the way they should, do not go with any that do not. Don't think that those policies are going to protect you. They do not. They protect, wait for it, the contractor or the architect, it protects them. It does not protect you. You need to have the right insurance policy in place while you have your rebuild underway. Very important. The last thing you want to do is end up in a situation where during construction, there's another event or maybe somebody gets hurt or who knows what happens and now you're without insurance. If there's one thing everyone should have learned by this, it's the value of having an insurance policy. I've taken hundreds of from clients with claims, hundreds. And I can tell you everything from the crying to the screaming to the pleading, it all ends the same way. Oh my gosh, I am so glad that I have this insurance policy. I am so lucky that I have coverage. I've heard horror stories. I am so glad that I have protection. And that's going to be something that I hope people can remember because, and we'll talk about this later, the prices that we're going to be paying for insurance is going to be increasing. Not just because of this event, but because of other reasons that we're going to talk about in the next segment. So stand by. When we come back, we're going to talk about what we should be expecting with insurance premiums over the next few months, over the next few years, and beyond that. And we're going to talk about things that, what types of things you can do to try and save money on your insurance policy while these rates start to climb. This is an insurance hour. I am Karl Susman. We will be back in 60 seconds. Have you been dropped by your insurance agency or senior premium skyrocket? Susman Insurance is here to help. We're a family-owned and operated insurance agency that's been serving our community for two generations. At Susman Insurance, we know how stressful it can be to find the right coverage, especially when prices go up or you're left without insurance. That's why we're committed to finding you competitive rates, whether it's for fire, home, earthquake, flood, auto insurance, you name it. We've got you covered. Give us a call or send a text to 310-820-5200 or visit us online at Susmaninsurance.com. Plus, stay updated on all things insurance by joining our text group. Just text 567-4-Karle-with-a-K. That's 567-367-5275 to get the latest updates straight to your phone. Susman Insurance, your family's insurance solution. Hello, hello. This is Insurance Hour. I am your host, Karl Susman. Thank you so much for being here today and learning about your favorite topic and mine insurance. The phone lines are not open right now because we are talking specifically about the California wildfires, but you can still call or text in with your questions. That number is 559-656-0317. Again, 559-656-0317. Or you can email your questions in to Questions@InsuranceHour.com. Do the best I can to get back to you directly if you like. Or if you like to have your voice read, your voice played on the phone, then just let us know if you leave a voicemail and during one of our question and answer shows, we will play you live and I will answer your questions live. That reminds me, you know, I get a lot of questions and I'm always trying to address those questions here with you. but I'm only human and I might make a mistake. And I want you to understand that my goal is to get you the most accurate and up-to-date information all the time, but I might miss the mark. If you hear something and it just absolutely does not ring correct for you, or you've been told something that's exactly the opposite, let me know. Give me a call, shoot me an email and say, hey, Karl, you said da, da, da, da, da, but I've heard something else. I will then take the time to go and research that again and find out what the correct information is. Again, this isn't an ego thing. My goal is to be sure that you have the right information, the most up-to-date, accurate information. And if I find out that there's better information, I will be the first one to jump on here and tell you, hey, I said this before, turns out this is now the case. I want you to have the right information. So don't be shy. If you're hearing something and you think it might not be correct, let me know. With that, let's move on. So what is going to happen? with our insurance market in California. We have been suffering the last several years, and that's putting it mildly, suffering with what we're calling an insurance shortage. What does that mean? It means that most insurance companies, and I say most, we can say around 90 or more percent of the companies that hold and write insurance policies in California have stopped offering coverage. Slowly over a period of the last few years to let's just say current time when basically they've all stopped. And the reason for this is very simple. It's dollars and cents. Let me explain how that works and why that works. In California, in order for an insurance company to sell, let's just, we're talking about homeowners insurance, so let's just stick with that. In order for an insurance company to sell a homeowners insurance policy, they have to create the policy. They have to decide how they're going to charge for it. They have to decide what comes within it, what limits it has, what coverage it provides, all sorts of things. They have to basically create a policy, create a contract. Now, they can't take that contract and just start selling it. They have to turn around and go to the State Department of Insurance and say, hello, State Department of Insurance, I wanna sell this policy and here's how I wanna price it and here's what I wanna do. The Department of Insurance then has to look at it, have all their, I call them the big brains, all the actuaries and all those other folks go through it and look at it and see, does this make sense? Is this fair? Is there anything in here that's discriminatory? They go through it with a fine tooth comb. And after a lot of back and forth, the Department of Insurance, hopefully, will approve that contract to be offered to the public. But like everything else, times change. Risks change, people change, all sorts of things change. So insurance companies need to make changes to those policies as well. Well, anytime an insurance company wants to make a change to a policy, whether it be the price, whether it be a discount, whether it be how they underwrite something, do they want it? to take trampolines if they have one? Do they not? Do they want to just surcharge if they've got an aggressive dog or exclude the dog? All these different minutiae that come with a homeowner's insurance policy, they might want to change. Well, before they can do that, they have to once again submit a request to the Department of Insurance and the Department of Insurance has to say, okay or not okay or not okay, but try it this way and there's an up and back until the Department of Insurance is comfortable. This happens with the price that's being charged as well. Well, here's the rub. Insurance companies are not non-profits. They are privately held companies with shareholders and they must have a profit. Forget shareholders. If they're not making money, then they don't have money to pay claims. It's pretty simple. It's just math here, right? So in the event that an insurance company is not able to get a sufficient rate or they're allowed to surcharge for certain things, they're not allowed to give discounts for sure. If there's something that breaks down between an insurance company and their actuaries and what they wanna do and what the Department of Insurance is willing to let them do, we have an impasse. And that's sort of been the story in California for about 30 years. Now, that's been a problem. However, it's been doable. That's the official term, doable. It's been doable, it's happened. Now, we've lost a lot of insurance companies because they simply can't make money here. They're not able to charge enough premium or underwrite basically the way they want to. They're not able to make it work, so they've left. So we've been left with other carriers that are willing to write. So we've had less choice, which personally I do not like. I like free market, I like choice, I like competition. And we've had less of that because of these heavy regulations. But what's happened now over the last decade or so is because we are having such wild events from the weather. We are seeing what are called 150 year events, which spoiler alert, that's an event that's anticipated every 150 years or so. We're seeing those every three or four years. Now think about that. If you price something with the expectation of a massive loss every 150 years when it's happening every couple of years, something's not gonna work. You're not going to have money. You can't regulate an insurance company to the extent that they're losing money. And if you do, it can't last forever. So what we've been seeing over time over the last few years is as these events keep happening, as these humongous claims start coming in from these massive disasters that we're seeing, mind you, this is not just California. This is happening everywhere. The insurance companies are losing money. And again, if you're paying $1,000 for claims, but you're only collecting $950 in premium, how long can that go on? Forget profit, not profit. How long can you possibly be expected to happen? money to pay claims. One of the largest insurance companies in the state of California State Farm has put in two, not one but two, emergency relief declarations to the California Department of Insurance that basically say, if you do not let us raise our rates, we will not be able to pay our claims. Period. It's not political. It's not a money grab. It's just money. It's just dollars and cents. The Department of Insurance has to look at the books from State Farm and decide, is this true or not? Does it add up or not? Do they have the money or do they need more money? And based on that, hopefully, the department will make their decisions whether the rates go up or down. So rates are going to start changing and it's not because the insurance companies want to start making more money, of course they'd love to, but they have to stop losing money which is actually what has been happening. Don't let anyone convince you otherwise. It's not true. One more quick break. We'll get right back to it. This is Insurance Hour. I'm Karl Susman. Ladies and gentlemen, boys and girls, in just a few moments, the window to the magic podcast show will begin. My name is Patrick. My name is Calvin. I'm Mouseketeer Greg. My name is Paul, and I will be your guide through the wonderful world of Disney sound experiences. This show is a weekly trip into the world of the Disney theme parks and resorts. And this is the place where you get to use your ears to surround yourself with the magic. For your safety, please remain seated while listening to the window to the magic dot com podcast. Maybe there's a name for this. Something like Disnotic Obsession. Please visit window to the magic dot com for more information or you can find us on Apple podcasts and in the iHeart Media app. Hello, hello, this is Insurance Hour. I am your host, Karl Susman. Thank you so much for being here today. We are talking about my favorite topic, insurance. Our phone lines are currently not live because we are talking about the California wildfires, answering questions that have already been submitted and talking to you about what you need to know. A quick shout out to our new friends at K-E-I-B AM 1150, the Patriot. We are thrilled to be here on board with you guys. All right. Now then, we were talking before the break about insurance companies and premium and what should we be expecting in the future? As a matter of fact, this has been a very important and full show. If you've missed any part of this, then either jump back to the beginning and listen right now if you're listening to this on some streaming platform. You'll find us everywhere. We're on the iHeart Media app. We're on Spotify, we're on YouTube, we're on Apple Podcasts, pretty much everywhere. If you search for insurance hour, you're going to find us. But this show has a lot of information, so if you've missed any of it, definitely go back and find the beginning of it and start listening. So we're talking about how insurance companies are making money or losing money, whichever is the case. And in California, they are losing money. Now I know you've probably heard otherwise, and you've said, well, wait a minute. That's not true. They're making money. Well, again, let's look at this rationally. If we take for a fact that the Department of Insurance is extremely liberal, which we will, and extremely consumer friendly, which it is, and we take for a fact that they will only approve rates that they can see add up, meaning they are absolutely necessary. The Department of Insurance has regulations that follows where it specifically says premiums must be adequate, but not excessive. Those words are actually in the law. It's in the regs. So if we accept all of those, and we have to, because it's a fact, and it's there, and well, I can wait to read if you want, and we understand that an insurance company can only charge a premium that the Department of Insurance approves. If the insurance company is now showing the department that it does not have money to pay claims, such as State Farm was doing, there could only be one reason that they don't have money to pay claims. You can't turn around on one hand, not let an insurance company charge an adequate premium for a particular risk. And then when the loss happens, not let them take additional premium then to pay the claims. You gotta get the money from somewhere, right? And since we know in California, we are so heavily regulated that there's no way that an insurance company can charge a penny more than it can justify in black and white, in simple math, and probably on their knees begging. We have to accept that now that these losses are happening, these massive events are happening, they're saying that these wildfires in California could have an impact of over half a trillion dollars, trillion dollars. You have any idea how much a trillion dollars is? Well, I'll give you an idea. That's even more than Elon Musk has, okay? That puts it in perspective. So if you're looking at economic impacts that are that high, when would you expect, and how would you expect that to be paid by premium that ranks, are you ready for this? As the ninth or 10th least expensive state in the country. You heard it right. California ranks as about, I think it's number 10 now, the 10th least expensive state in the country for homeowners insurance. How ridiculous is that? How is that even possible? When we have earthquakes, we have wildfires, we have all of these things and they're happening over and over again. Well, it's been difficult and this is why carriers have been leaving the state because of those losses and because... they've been increasing. Because if anyone knows what the future is going to hold for us as far as weather-related events, it's going to be the companies that make a living based on what happens with them. Carriers know they have the most sophisticated models. They've been sounding the alarm bell for years saying, this is not good, this is going to be bad. Look at State Farm, for example. State Farm non-renewed in 90272, which is Pacific Palisades, 1626 homeowners insurance policies. And everyone had a fit. They were fit to be tied. How can they do this? Well, they did it because they knew, because they can follow computer models, that this area has the potential to have some really, really bad fire losses. And guess what? They were right. So which is it? Are we going to let the carriers... make enough money upfront so they can pay for the claims and let them compete with each other to keep the rates down or do we keep regulating them so hard that the majority of them start leaving the state because they literally cannot make a profit and the ones that remain either don't have enough money and we're seeing that or they don't have enough money without surcharging policyholders or getting loans or going to the feds to try and get money to stay afloat. It's ridiculous. It's ridiculous and I hope if nothing else we will learn and we will take away from this particular event this simple fact that in order for us to have a vibrant insurance market in California we need to have new regulations. Oh what did you say Karl? We have new regulations. You are absolutely correct. As of December 2024, okay, not that long ago, right? It seems like another lifetime ago but it wasn't. It was just a few months ago. New regulations were put into place by the California Department of Insurance. It's known collectively as the Sustainable Insurance Strategy. It's a new set of regulations that update the 30-year-old laws and allow insurance companies to do the things that they do let's just say in every other state and in every other country it lets them start utilizing all of those expensive and those fancy tools to be able to predict what's going to, where is there going to be a loss? What can people do to prevent a loss? What are types of things that they can do to their homes for example to make them less likely to burn? Who would not want this data? I'm a consumer first. That's what I want. Please tell me what can I do to my home to be sure that if there's another fire and let's face it we all know we are not done with wildfires when the next fire comes that my home could have a better chance of survival. I want that information. Unfortunately, in the past, the insurance companies had no, there was no reason for them to provide it because the Department of Insurance wouldn't allow them to rate based on that, right? So that's all changing because of these new guidelines that came out in just a nick of time within weeks before the wildfires happened. Those regulations came out. So if we can survive, if the industry can pull through this event and so far, knock on wood somewhere, they are doing that, then I suspect what we're going to see is more companies coming back to California, offering insurance and competing and lowering the price. Can you imagine that? It used to be, I mean, my job is to find consumers insurance and I used to be able to take the average consumer and give them half a dozen or a dozen choices. And as the years have gone by, especially the last three or four years, it's gone down to two choices or three. And sometimes none. That's not okay. Talk about broke. So let's hope these new regulations will do what they're designed to do. One more quick break and we're back. This is an Assurance Hour. I am Karl Susman. Stand by. Are you feeling lost in the search for the right insurance? Making call after call, only to find no one willing to go that extra mile for you? At Susman Insurance Agency, we understand that frustration and we're here to change your experience. Where others see obstacles, we see opportunities. While many might shy away from jumping through hoops, at Susman Insurance Agency, we are prepared to leap. Looking under every rock, exploring every avenue. That's not just what we do, it's who we are. Our dedicated team doesn't just offer policies, we provide solutions. Solutions born from persistence, expertise, and a genuine commitment to finding you the best coverage possible. We don't just meet expectations, we surpass them. If you're tired of hearing no or it's not possible, it's time to turn to a team that believes in yes and let's make it happen. Don't settle for less. Reach out to Susman Insurance Agency at 877-411-5200. Visit us online at Susmaninsurance.com or email sales at Susmaninsurance.com. Let's uncover the insurance solutions you deserve. Susman Insurance Agency, going the extra mile every time. Hello, hello, this is Insurance Hour. I am your host, Karl Susman. Bone lines are not open right now because we are taking your questions and giving you tips regarding the California wildfires. So make sure you still call or text and give us your question. We will get to it on a future show. That phone number is 559-656-0317. Once again, 559-656-0317. Or you can send your questions in by email to Questions@InsuranceHour.com. A big howdy to our new friends at K-E-I-B-A-M 11-50. The Patriot, we are thrilled to be here with you in our final segment. You know, I was sitting here during the break. like having a sip of coffee and thinking, you know, I sound like an insurance company defender. And the irony of it is that is not what I am and not what I do. My job as an insurance broker for over 30 years is to find an insurance product best suited for my customer, right? That's my job. So whose side am I on? I'm on the side that gives me more companies to offer coverage because it gives me a better chance of finding a competitively priced and properly created policy. That's what I want. I want to see more policies, not less. And what I've seen are less companies offering policies. What I've seen are more companies leaving the state of California because of the guidelines and because of the regulations that were being imposed on them. Interestingly enough, when I go to national events and I talk to insurance brokers that are home-based in other states, you know, we sit and we talk. And it's amazing to me. some of the discounts that other states are allowed to offer that make a lot of sense. For example, would you not like to pay less for example for your car insurance based on how you drive? Duh, of course you would. Would it surprise you to know that in the state of California, two identical drivers, one that's never had a ticket or accident in their entire life, the other one has four speeding tickets, two at-fault accidents, and another at-fault accident where they killed someone. But do you know that in three years, both of those people will pay the exact same price? Because in California, the way the regulations are written, after three years, you get a free pass, you get a do-over, you are quote unquote a good driver. So don't tell me that two things aren't happening with those regulations, those types of regulations. Number one, they are making people drive less safely because worst comes to worst, three years. Worst comes to worst, they're a good driver again in three years. We're all suffering from that. And number two, all of the rates that we're paying are going to be inflated because guess what? We saw again, this is just math. It's not political. It's not who's side are you on. It's just math. In order to be able to pay for that actual risk for that driver with all of those tickets or all of those accidents after the fact, and three years later, they're getting that good driver rate because that's what the regulations say. Everyone's going to have to be paying a higher rate to subsidize it. And it's the same way in the past with property insurance. People that live in areas that are higher likely to have a fire related loss are paying relatively speaking, less money than their actual risk exposure is. And guess where this subsidy is coming from or has been coming from? From people that don't live in those areas because the risk is what it is. Right? The insurance company cannot charge a premium that is appropriate for the risk and they want to stay profitable, they have to find the money somewhere. And that somewhere is the other people, the other risks that they are able to get premium on. So if you take nothing away from today's show, take one thing away. The regulations that have been on the books for over 30 years in California have squeezed the insurance companies to the extent that, number one, we've lost a bunch of them. And they've literally pulled up stakes and left the state of California. And two, they have allowed insurance companies to be at a place where they cannot make money. And everyone wants to pretend that's not true because insurance companies are big and they've got all this money. But in California, they cannot make money. And if they're not making money, they can't pay claims. If they're not paying claims, what's the point of having a premium that's super low, that's the 10th on a scale of up to all 50 states. It's number 10 for the least expensive. What's the point of having that low premium if it means that you're getting a crappy policy because that's all they're willing to offer or you're getting a policy with a company that you've never heard of or you're getting a policy with a company that might not be able to pay the claim. There's no magic to this. If 10 insurance companies look at a risk and say, I can't ensure that risk for less than a dollar. And then you've got one company that says, I'll do it for a quarter. And then everyone says, that's the company to go with. No, that's the company that's not going to be there when there's a claim. That's not where you wanna go. But these old regulations were forcing that type of company to bubble to the surface because the other companies could not charge the premium that was sufficient to pay for the risk. All right, I gotta stop. Just understand, my job, find insurance for my clients. And I'm telling you, after doing this for 30 years, and yes, I started when I was in kindergarten, I can tell you that there is not a state out there that is more heavily regulated than California is and to the detriment of consumers. It drives literally poorer driving habits because of the way we give that reset every 36 months. And it allows people more comfort to build and to buy in areas that are a higher wildfire risk because again, their cost of insurance, instead of matching the risk of being up that narrow windy road that a fire truck could not even get up if it wanted to because the price they're paying to live there is being subsidized by the people that live in the middle of the city. Does that make sense? If it doesn't, let me know. I'll try and explain it again. Remember, you can always call in after hours, anytime, leave your questions and I will get to it. That number to call is 559-656-0317. You can call or text that number or you can send an email to Questions@InsuranceHour.com. Again, I appreciate you being here today and hearing a little bit about what to do regarding these California wildfires. And also keep in mind, we are not done. We are far from done. The recovery from this is going to be years and years and years. Together, let's get the right information out to people. We have not seen the last of this. We need to be sure we understand how our insurance policies work. Everyone stay safe. I do want to thank all of you for taking the time to listen today. I know insurance is not necessarily the most sexy concept. It is important that you understand what it is you're looking for, what it is you think you're getting and finally what you actually did purchase. You simply need to know more than you used to. Things are more complicated. If you have any questions, please reach out to me directly at 559-656-0317. You may also send your questions to Questions@InsuranceHour.com. Informing, educating and entertaining one policy at a time, this is Insurance Hour. The show is dedicated to Shamrock Papa.