Evelin Weber and her neighbors fled their Malibu homes as the deadly Woolsey Fire tore across the California coast in 2018. Ever since, haunted by fears of another blaze, she’s spent $300,000 on fireproofing her house.

Weber installed a fire hydrant outside her $4 million home, built a new turnaround for firetrucks in her driveway, planted fire-resistant plants and cleared brush. She and her husband also founded the Malibu Foundation to provide financial help for Woolsey victims and offer education on fire prevention and preparation.

“I’m living in panic like four or five months out of the year now,” she said. “The risk of fire is too high and the risk will continue to get higher.”

Her investment underscores a harsh new reality in California: Wildfire readiness is quickly becoming a financial necessity. As the state braces for its biggest insurance overhaul in decades, rising premiums are a given. Fire mitigation is likely to be one of the few levers property owners can reach for to get a break on premiums — or to secure or maintain coverage at all. Regulators say boosting preparedness has never been a bigger priority.

“It’s actually been an afterthought for decades and now it is front and center for us,” said Michael Soller, a spokesperson at the California Department of Insurance, which is poised to finalize the market revamp by year-end. “Everything that we’re doing, every single change that we’re making through the sustainable insurance strategy, all put wildfire safety at the center.”

Insurance Pain

California experienced its deadliest and most destructive wildfire year in 2018, and millions more acres burned in 2020 and 2021. After a relative respite in 2022 and 2023, this year brought new devastation in terms of acres burned.

Insurers such as Allstate, USAA and State Farm have been sending out non-renewal notices to customers or leaving California altogether, citing state-imposed limits on rate increases and the increasing cost of fires.

To coax companies back to a state long known for consumer-friendly rules, Insurance Commissioner Ricardo Lara plans to open the door to higher rate increases by allowing the use of forward-looking catastrophe models and accounting for reinsurance costs. At the same time, state officials want to make it easier for homeowners who invest in wildfire safety to receive larger savings.

California already requires insurers to provide discounts to homeowners who take steps to protect their properties. But as part of the regulatory changes, pricing will also factor in community-scale wildfire risk, potentially spurring more widespread investment in mitigation. Policyholders in the riskiest areas will benefit most, Soller said.

One big catch: the price tag.

A full retrofit of a typical 2,000-square-foot (186-square-meter) home in California involves installing new windows, enclosing eaves and replacing wooden decks or roofs, and the cost can easily soar to $40,000, according to a report earlier this year by researcher Headwaters Economics.

In extreme cases, the cost can reach $100,000. While cheaper measures such as clearing brush can also make a difference, simply installing flame-resistant gutters and replacing flammable mulch can still run as high as $15,000.

Camp Fire

In the town of Paradise, where 90% of local structures were destroyed in the 2018 Camp fire, many homeowners lack the money to make even minor improvements given the financial strain from rebuilding. Despite federal grants and a broad-based settlement with PG&E Corp. that covered that fire and two others, the town has only partially rebuilt.

“A lot of people aren’t able to landscape because it’s so expensive,” said Jen Goodlin, executive director at the Rebuild Paradise Foundation, which helps finance mitigation.

Insurance discounts are often too paltry to provide significant savings to consumers, said Carmen Balber, executive director of the advocacy group Consumer Watchdog.

“Most insurance companies aren’t giving people meaningful mitigation discounts and that means discounts as an incentive to mitigate aren’t working,” Balber said.

State Farm last month implemented a 0.1% break for homeowners in wildfire-prone areas who install fire resistant vents, multi-pane windows and clear combustible materials. For a policyholder paying an annual premium of about $13,788, that would amount to savings of $14.35, according to filings.

Even more substantial upgrades such as replacing a roof could result in a only 6% discount. But even customers who take all 12 of the state’s wildfire-prevention steps can’t get more than 10%.

“Wildfire mitigation discounts are one part of a wide range of potential discounts State Farm offers to eligible policyholders to help them manage risks and lower the cost of insurance,” said Tom Hartmann, a spokesman for the insurer. “We encourage our customers to check with their local State Farm agent to learn about the full range of discounts that may be available to them.”

Government Support

State and federal grants, tax incentives or legislative action probably will also be needed, said Karen Collins, vice president of property and environment at the American Property Casualty Insurance Association, a trade group. “It’s going to take a holistic set of incentives,” she said.

But two bills to bring relief to consumers who can’t get insurance despite hardening their homes failed in the legislature this year. Both initiatives aimed to reduce premiums by requiring companies to factor mitigation into their underwriting guidelines or catastrophe models when setting rates.

“Insurance companies need to take into account these large-scale mitigation efforts,” said state Senator Josh Becker, a Democrat from the San Francisco Bay Area who authored one of the bills. “They wanted to make so many changes watering down the bill that would’ve made it useless. It’s something we’re going to need to come back to.”

For now, more Californians are investing in protecting what for many is their most valuable asset. At Komodo Fire Systems, a startup selling eco-friendly fire retardant, sales to homeowners doubled over the past year.

“It’s not a substitute for vegetation management and defensible space clearing,” said Komodo’s Rob Latham, a former firefighter. But with customers willing to ramp up spending to buttress their homes, “the interest is through the roof.”

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