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1 1 (January 16, 2025)

handle is hein.crs/govesee0001 and id is 1 raw text is: 1Congressional ____ S£ Research Service Homeowners Insurance and California Wildfires January 16, 2025 Insurance premiums for homeowners across the United States have significantly increased over the past few years, with some homeowners encountering difficulties in obtaining insurance. While such market disruptions have occurred in Gulf Coast states for many years due to hurricanes, California and other western states have developed such insurance market problems more recently, starting with wildfires in 2017. The 2025 Los Angeles wildfires have already produced multi-billion dollar damage estimates and will likely exacerbate the state's insurance market disruptions. This Insight addresses common questions related to homeowners insurance and the threat ofwildfires. Does homeowners insurance cover wildfire damage? Wildfires are typically included as a covered peril in standard homeowners insurance policies. The exact amount of damage covered, however, depends on policy specifics, such as deductible amounts and maximum coverage limits. After disasters, people commonly discover that rebuilding their home costs a good deal more than their insurance coverage, a phenomenon known as underinsurance or a protection gap. A study on a 2021 Colorado wildfire found that 74% ofthose filing claims were underinsured. How is insurance regulated? Unlike other financial services companies like banks, there is no federal regulator for insurers; instead companies offering homeowners insurance are regulated by the states they operate in. While each state has their own specific laws, products offered to individuals, like homeowners and auto insurance, are typically regulated on features such as exact policy language and the premiums to be charged. Some states, including California, require regulatory approvals before insurers raise premiums, while other states allow insurers to raise premiums on their own recognizance (but may examine such increases after the fact to ensure they are not excessive or unfairly discriminatory.) Congressional Research Service https://crsreports.congress.gov IN12491 CRS INSIGHT Prepared for Members and Committees of Congress

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