Malibu property owners experiencing fire insurance hikes

Three and a half years after the Woolsey Fire, some Malibu residents are seeing massive increases of their fire policy premiums from their insurance companies, including the state’s own Fair Plan. 

A Malibu condo complex saw its total insurance premiums go from $140,773 per year to $694,405. A homeowner in Corral Canyon had hers jump from $17,632 per year to $71,433.

The homeowner’s association (HOA) at Malibu Villas, a townhouse/condo development at 28170-28400 Rey De Copas Lane, recently announced to its residents that longtime insurer Farmers Insurance Group was dropping their fire insurance coverage. 

“Last year’s insurance policy package cost our HOA $140,773; of which $66,509 was for property and liability,” wrote resident Louis Spiritu. “After piecing together coverage from six companies, this year’s total is estimated to be $694,405 — an increase of nearly 500 percent. Their stated reason is the recent spate of wildfires, not just in our area, but in other parts of California, Oregon and Colorado.”  

He went on to explain that the increase would necessitate a special assessment of nearly $5,000 per condo unit. 

“Barring help from our elected officials, that assessment promises to be an annual one,” Spiritu wrote. “Our HOA dues are already $855 per month, and this added hardship could very likely force some residents from their homes, joining the legion of homeless Californians on our streets.

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“Many of the owners here are senior citizens and retirees; as well as nurses, teachers, and veterans on fixed incomes; and multi-generational families struggling to make ends meet. Economic losses from two years of the pandemic had left many in a precarious financial position already.” 

Condos are not eligible for California Fair Plan fire insurance coverage.

Malibu Villa property owner Linda Bell echoed much of the same sentiment, writing that the HOA “tried very hard to find new carriers for the amount that had been budgeted, but unfortunately, they were not successful.”

A separate scenario involved a property owner on Corral Canyon battling a California Fair Plan surcharge in the wake of the Woolsey Fire. 

In 2007, Joan Borsten lost the garage of the house, which was purchased in 2006, during the Corral Canyon Fire. After that, she became very vigilant about fire protection, which she credits for saving the house and garage from the Woolsey Fire. 

“From 2007, I religiously clear all (almost) two acres,” she wrote. “I have a fire-break system that coats the house with retardant seven times when it detects a fire and can also be operated remotely, a special industrial-sized water faucet behind the meter, and professional fire hoses.”

Despite all of Borsten’s fire precautions and kudos from the LA County Fire Department, her private fire insurance was canceled when the company decided to exit California altogether. 

“The only fire insurance I could get was California Fair Plan, which I had sued in 2007 to get enough money to rebuild the garage properly,” she said.

Her annual premium for individual fire insurance went from $17,632 per year to $23,921 per year under Fair Plan. Then, Fair Plan told her she instead needed a “commercial” policy because her house was rented to a state-licensed six-bed drug and alcohol rehab center. 

The insurers also included a $46,622 “Brush/Wildfire Area Surcharge” per year, raising Borsten’s total premium to $71,433, because there was brush within 400 feet of the house. In addition, Borsten said CFP cited a 2019 inspection report that she’d never seen before, and then later learned that CFP would use old inspection reports to, according to Borsten, “up premiums and slap on surcharges.”

The Fire Department had previously told Borsten that brush clearance only needed to be 200 feet, but Fair Plan explained that the new state law or regulation dictates 400 feet of brush clearance for “commercial” properties located in Very High Fire Danger Areas, which includes nearly all of Malibu. Borsten has not been able to determine what law or regulation CFP is referring to.

Borsten protested that the “commercial” surcharge for the rehab was inappropriate because she said state and federal law considers six or fewer people with the same affliction living under the same roof to be a family, not a commercial enterprise. But Fair Plan refused to budge on that point, saying the surcharge would stick unless she rented to private individual(s); and also informed her that a vacant house must also pay a surcharge on fire insurance.

As for the brush clearance, even though Borsten said she’s a fanatic about keeping her entire two acres cleared, her property is adjacent to Santa Monica Mountains Conservancy land, and public lands aren’t required to do brush clearance. She, therefore, has no control over the fact that public lands with brush lie within 400 feet of the house.

After reaching out to a number of people in state government, Borsten was helped by Lt. Gov. Eleni Kounalakis, who she’d met several times previously, and got the ear of the state department of insurance, who advised her to file a formal complaint. 

Borsten said a Fair Plan inspector met her at the house to personally inspect the property. He gave her an A+, which lowered her annual surcharge premium to $29,144 if she continued renting to the rehab. If she rented to an individual or family, there would be no surcharge.

California Fair Plan was unable to send Borsten a list of infractions that could add a surcharge to someone’s policy, “because apparently, they don’t have one,” she said. 

Borsten suggests other Malibu property owners should work together and advises making an official complaint to the California Department of Insurance online at cdiapps.insurance.ca.gov/CP/create-complaint-page/   

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