Northern California wineries and farmers vie for a FAIR share of wildfire insurance coverage

Charlie Martin may have thought his wildfire issues were alleviated once he reopened his Chalk Hill ranch after the 2019 Kincade Fire destroyed non-essential buildings and burned the land.

But two years later, he faces serious insurance issues for his 300-acre ranch at Chalk Hill outside of Healdsburg and wants his fair share. Martin saw three policies reduced to one that only provided $ 400,000 in coverage for the ranch manager’s house. Anything beyond that, including its wine and boarding operations valued at $ 3 million, has been denied coverage due to the risk of fire given its location.

Tubbs, Kincade, Nuns and Glass – Sonoma County is home to some of the state’s worst wildfires in the past four years. The rest of North Bay and the state, for that matter, are not doing much better. More than 4 million acres have burned in California in the past year alone, Cal Fire reported. Double that number, and you have the area burned in just three years from 2017. During that time period ending last year, Californians suffered 45,726 structures burned down and 183 deaths.

With an unprecedented drought and already around 6,500 more acres consumed by the fire in the first six months, indicators show this year could be worse.

“I’m holding my breath,” Martin said. “And I was 45 years with the same insurance company. I polled every insurance company I could think of.

When choices ran out for Martin, he turned to the California Fair Plan, which is billed as the state-sponsored plan of last resort. It also comes at a higher price. Then there is another catch. Existing laws governing the FAIR plan prevent it from covering agricultural property.

California Senate Bill 11, which the Assembly joined in the Senate in passing last week, seeks to remove exemptions, at least on buildings and inventory or stock. The bill, drafted by Senator Susan Rubio, D-Baldwin Park, returned to the Senate due to an amendment. If it is accelerated as planned, Gov. Gavin Newsom is expected to sign it in the coming weeks.

Yet the battle is not over. Once implemented, insurance companies can take months to adjust to legal change. But time is a luxury ranchers don’t get when they stare at the barrel of a firestorm threat.

Like wildfires, the problem crosses Sonoma County borders

“The castle is not covered,” V Sattui Winery general manager Tom Davis said of the family’s Castello di Amorosa in Saint Helena, a primordial labor of love for Dario V Sattui. “The bill isn’t helping this year, and it doesn’t go far enough. It caps at $ 3 million. For the agriculture industry whose insurance has been canceled, this is only a fraction of what many people need. Some homes are over $ 3 million, let alone a winery.

V Sattui Winery got coverage, but it came at a cost.

“We’re paying four times what we paid last year,” Davis said.

The Castello di Amorosa was damaged in last year’s glass fire that roared through Solano County before invading the vineyard-rich Napa Valley, then ascending and crossing Hood Mountain in the Sonoma County. The fire that broke out on September 27 caused $ 2.9 billion in insurance losses, according to the Insurance Information Institute.

The increase in forest fire coverage aligns with the costs of losses, prompting some insurance players to question whether the industry can maintain its viability at the current rate of threat.

According to PropertyCasualty360.com – an insurance data research company for brokers, the upward slope of escalating claims costs looks like a cliff.

Between 1960 and 1980, the aggregate average of California fire insurance claims cost $ 100 million per year. In the decade starting in 2000, claims increased six times that number. In 2019, that figure rose to over $ 4 billion, while last year the industry said such claims exceeded $ 9 billion.

An accelerating freight train out of control

“It’s a real crisis there. The FAIR plan is essential and a step in the right direction, but it does not go far enough, ”said John O’Neill, senior general manager of the San Francisco office of Risk Strategies Company.

O’Neill cited a client of his brokerage firm as paying over $ 120,000 a year to insure a $ 1.2 million building. Some forest fire deductibles are equivalent to half the value of the coverage.

“I have worked in this industry for 30 years and I have never seen a more difficult time,” he said. “It’s not sustainable.”

His hat goes to State Farm, which insures in postal codes refused by other carriers. But how long can insurance companies like State Farm bear the burden before the system goes down, O’Neill asked.