A South Bay family recently encountered a surprising development with their home insurance premium, which skyrocketed from $9,000 to $18,000 annually for a property situated outside of a high-fire risk zone.
Pamela Tremain, the homeowner affected by this dramatic increase, expressed her astonishment, stating, “I was dumbfounded because our annual premium absolutely doubled.” The insurance coverage pertains to their second home located in Amador County.
Seeking clarification, Tremain reached out to Farmers Insurance, but the response provided was that the spike in premium costs was attributed to inflation in California. Despite efforts to obtain comment from Farmers Insurance by NBC Bay Area, no response was received.
Robert Chapman Wood, an economics professor at San Jose State University, shed light on the market dynamics driving such substantial premium hikes. Wood noted, “Right now, the insurance companies are sort of in a panic, and they’re grabbing whatever they can.” He emphasized that the impact of devastating wildfires in California is being felt universally by residents, leading to significant insurance market instability and a rising number of companies discontinuing policies altogether.
Wood likened the current state of the insurance market to that of the oil and gas sector, with prices fluctuating markedly based on supply and demand dynamics.
Tremain, fortunately, managed to secure an alternative option by switching to AAA Insurance, a provider covering her vehicles and primary residence in Willow Glen. Her new premium with AAA amounts to less than $7,000 annually for the same property. Reflecting on this change, Tremain remarked, “It worked out, but it’s kind of disheartening. You want to be able to trust your company.”
The case of Pamela Tremain highlights the broader challenges faced by homeowners amidst the evolving insurance landscape, marked by significant volatility and cost increases, primarily attributed to concerns stemming from wildfires impacting the state.
