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LA fires fuel concerns over rising cost, availability of Tahoe homeowners’ insurance

SOUTH LAKE TAHOE, Calif. — The loss of billions of dollars worth of property in Los Angeles in recent weeks has sparked new concerns about the underlying sustainability of homeowners’ insurance in California. These state- and federal-level challenges will likely impact Tahoe basin residents financially. For many basin homeowners, “home hardening” and creating defensible space around their homes will likely become increasingly important not only to fire safety, but to keeping their insurance. 

“Insurers signaled even before the LA wildfires that they would seek much higher rates,” says Dave Jones, former California Insurance Commissioner and Director of the UC Berkeley Law School Climate Risk Initiative. “Insurers are likely to seek even higher rates after the fires.”

“This will fall hardest on those in high wildfire risk areas like Truckee and Tahoe,” says Jones.



The extreme challenges faced by many Californians trying to secure homeowners’ insurance coverage have been well covered by our outlet and others, as insurance companies declined to renew 2.8 million homeowner policies in the state between 2020 and 2022, leaving millions of Californians scrambling. (You can read more about that in this story, “Can new state regulations resolve California’s existential insurance crisis?“). 

In the wake of the LA fires, more non-renewals and rate increases are likely. 



According to Truckee-based realtor Dave Westall, leading insurance companies like State Farm, Traveller’s Insurance and others “just don’t write new policies in the Tahoe market anymore.” In Tahoe and elsewhere, the FAIR plan has been one of the only places to turn. The FAIR plan is California’s “insurer of last resort”, offering coverage to those who can’t get it anywhere else. 

“For new policies, most of the Tahoe area is going to be on the FAIR plan,” says Westall. “For people who are getting dropped or not renewed, that often means their rates are going up 100%, if not more.” 

“It makes it even harder for our local community to afford homes,” says Westall. “Second homeowners might not even notice the increase in rates, but for a lot of people, it makes a big difference to whether owning a home is a real possibility or remains a dream.”

Westall adds, however, that “a lot of people don’t know that the FAIR plan maxes out at $3 million.” This could leave wealthy basin homeowners looking at millions in losses in the wake of a fire.

The FAIR plan is also likely to become more expensive. 

“The FAIR Plan does not have enough money to cover the claims from the LA fires,” says former insurance commissioner Dave Jones. “New rules adopted late last year provide that the FAIR Plan can get permission to assess all policyholders to cover the shortfall. So homeowners are likely to see insurance rate increases and an additional charge to cover the FAIR Plan’s shortfall in funds.”

For many basin homeowners, “home hardening” and creating defensible space around their homes will likely become increasingly important. These practices are already familiar to many basin residents from past fire seasons. Practices include cutting trees within a certain distance of a home and clearing yard debris, among other things.

Making basin properties “firewise” is a costly investment, requiring significant time, effort and money from property owners.

“The reality is, you can do all that work, go to your insurance agency and say ‘here’, and still be dropped,” says Jeff Cowen, Public Information Officer with the Tahoe Regional Planning Agency (TRPA).

“We’ve tracked more than 60,000 defensible space evaluations [from insurance agencies and other organizations] in the basin,” says Cowen. “Not all of those have been the property owner actually doing that work, because doing that work is hard, and time-consuming, and expensive, but it gives a sense of how much this has become a part of owning property in Tahoe.”  

Multiple homeowner’s associations (HOAs) are also increasingly involved in creating and enforcing “firewise community standards.” The Tahoe Donner HOA, for example, has its own forestry department which it claims is “nationally regarded as a leader in their field when it comes to defensible space, wildfire reduction and overall forest health.”

Increased enforcement of these requirements will likely be especially notable for second homeowners, who may have to make special arrangements for work to be done in their absence. 

When it comes to making real strides in both reducing fire risk and keeping insurance coverage, the scale urban planners and communities are looking at has changed since the 2007 Angora Fire, according to Cowen.

“We’re at a point now where we have to ramp fire safety efforts up to the landscape scale,” says Cowen. “The parcel-by-parcel work is always something that will have to be done, as will forest resilience projects around neighborhoods, but the goal now is to get to where we’re not treating 300-acres. Now, we’re looking at the whole basin.”  


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