Pacific Palisades, the Los Angeles neighborhood that’s been devastated by the Palisades Fire, is emblematic of the insurance nightmare increasingly facing homeowners residing in regions prone to climate disasters.
About 1,600 policies in Pacific Palisades were dropped by State Farm in July, California Department of Insurance spokesman Michael Soller said in an Thursday email to CBS MoneyWatch. An analysis of insurance data by CBS San Francisco last year found that State Farm also dropped more than 2,000 policies in two other Los Angeles ZIP codes, which include the Brentwood, Calabasas, Hidden Hills and Monte Nido neighborhoods.
In an email to CBS MoneyWatch, State Farm said, “Our No. 1 priority right now is the safety of our customers, agents and employees impacted by the fires and assisting our customers in the midst of this tragedy.”
State Farm’s decision reflects a trend of private insurers, including Allstate and Farmers Insurance, of dropping California policies or halting underwriting, leaving homeowners with the choice of getting coverage through the insurer of last resort, the California Fair Access to Insurance Requirements Plan, or FAIR Plan, or forgo insurance altogether. The FAIR Plan provides basic fire insurance coverage for properties in high-risk areas when traditional insurance companies will not.
As a result, homeowners in Pacific Palisades had increasingly shifted to the FAIR Plan, with roughly 1,400 of the town’s 9,000 homes covered by the plan in…
