Homeowners and businesses in California that filed for a fire damage insurance claim have already reached more than $9.4 billion years to date, according to a California State Insurance Commissioner spokesperson.
Despite a significant amount of fire losses, insurance companies may not be able to increase rates in 2018, due to the Proposition 103 measure. California voters passed the bill in 1988 that requires certain conditions against property and casualty insurance rates.
Under the state measure, California’s insurance regulator must approve any proposed rate hikes before companies can pass them to homeowners. The law also requires insurers to use a long-term trend to justify higher rates, instead of simply raising rates because of a one- or two-year impact from a single disaster.
S&P Global Ratings credit analyst Tracy Dolin said that the law makes it hard for insurance companies to increase rates in California, as opposed to other states. Insurance Commissioner Dave Jones said that rate hikes should take into account the damages from disasters over the last 20 years.
Jones said that wildfires in October were among the “most devastating series of fires in California’s history in terms of insured losses.” While it may be too early to calculate the exact amount of fire losses, S&P Global Ratings expects damages from October alone to reach more than $12 billion.
Those who prepare to file claims should also arm themselves with the right information. People may resolve claims within 24 months and not 12, according to Jones. On the other hand, you may also use the insurance money to build or buy a home, contrary to using it solely for rebuilding purposes, he added.
An insurance claim helps you to get back on your feet after a disaster, although you need to prepare several documents and know about the process to avoid delays and complications.