As Wildfire Season Nears, Many California Farmers Can't Get Fire Insurance | Civil Eats

As Wildfire Season Nears, Many California Farmers Can’t Get Fire Insurance

A ranch is threatened by the Maria Fire as it explodes to 8,000 acres on its first night on November 1, 2019 near Somis, California. (Photo by David McNew/Getty Images)

January 24, 2022 update: An update to the California Fair Access to Insurance Requirements (FAIR) Plan that goes into effect on February 1, 2022, will make hundreds of the state’s farmers and ranchers in wildfire-prone areas eligible to get insurance to cover them from property damage due to wildfires.

October 13, 2021 update: Ricardo Lara, the California insurance commissioner this week announced that policy limits on the state’s insurer of last resort, the Fair Plan, would increase for the first time in 24 years, nearly doubling to account for inflation. Lara also announced the state would require private insurers to consider property owners’ fire-mitigation efforts in setting insurance policy premiums.

On an October night in 2019, Scott Newman stood on his Sonoma Valley farm and watched the smoke plumes from the Kinkade Fire over the mountains to his north. He texted a friend, the local fire chief, “It looks like we might be in the fire path.” Minutes later, Newman recalled, the chief replied, “Sadly, yes.” By the following day, the fire had reduced nearly everything on his 500-acre property to blackened rubble. Only a single barn remained unscathed.

Newman’s crop and fire insurance policies covered just about all the damages, including six homes, 14 structures, and vineyard and ranching equipment worth hundreds of thousands of dollars. Over the next year and a half, he built anew on the property that had been in his family for 50 years.

But now, as Newman prepares for the next fire season, his Travelers fire insurance agent informed him that the company would no longer cover his property. Like several hundred other California farmers who have found themselves in the same situation, he now finds himself without fire insurance.

California’s fire season has become longer and more intense in recent years, in part due to climate change. Shorter rainy seasons, warmer temperatures, and drier vegetation in California’s fire-prone regions have all created a tinderbox, waiting to blow. Last year the state had its worst fire season on record, and this year is already raising concern among meteorologists and fire experts. California Governor Gavin Newsom recently declared a drought emergency in Sonoma and Mendocino counties, and 85 percent of the state is already in a severe, extreme, or exceptional drought.

Residential and commercial properties have been hit especially hard by the state’s insurance crisis. The number of non-renewals on residential properties grew every year between 2015 and 2019, affecting more than 950,000 customers. But those customers are afforded a state-mandated backup plan that explicitly excludes “farm risks.”

California farmers are already dealing with increasingly life-threatening conditions in wine country, the Sierra Nevadas, and the central and southern coasts. Now, that problem has been compounded by climbing costs and heightened risks as insurance companies retreat from these high-fire danger regions as well. And it’s more than just farmers who could face the consequences in the state that produces about half of the nation’s fruits and vegetables and 90 percent of its nuts.

Unprecedented Risks

As Newman rebuilt, he took steps to secure his property against future wildfires. He built barns out of metal rather than wood. He now keeps his tractors and pickup trucks in the middle of his property, away from the more flammable vineyards. He assumed his fire insurer would look favorably on these changes and continue to insure his farm.

But that hasn’t been the case. While Travelers continued coverage on his property’s homes, and the federal crop insurance program covers his vineyards and cattle, nearly $1 million in equipment and infrastructure is “sitting there uninsured.” That includes everything from hay barns to irrigation pumps, forklifts, pickup trucks, and a bulldozer, according to Newman.

Across the state, hundreds of farmers and ranchers are unable to obtain a fire insurance plan or have had their plans canceled in recent years, according to California Farm Bureau Federation (CFBF) spokesman Robert Spiegel. In Sonoma and Napa counties alone, nearly 500 farmers have lost coverage. On both the Central and Southern Coast, dozens of farmers are uninsurable. Growers as far north as Modoc County can’t get wildfire coverage, Spiegel said.

Where there is still fire insurance available to farmers and ranchers, costs are skyrocketing. “The cost of the coverage that’s available is double or triple,” said Michael Martinez, the legislative director for the California Department of Insurance, during a State Senate hearing in March. Agricultural insurance brokers who have worked in the industry for decades say they’ve never seen anything like it, said Steve Valencia, who has been selling California farmers policies since 1980. The situation has gotten so bad, that the California Farm Bureau Federation has made affordable fire insurance for farmers and ranchers “priority number one” in 2021.

The insurance industry has been hit hard by the unprecedented California wildfires of the last half-decade. According to the most recent data, in 2017 and 2018, more than 25,000 structures were damaged or destroyed by California wildfires, costing insurers more than $24 billion. Risk modeler RMS estimates 2020 losses, when fires damaged more than 11,000 structures, to be between $7 billion and $13 billion.

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The state’s wildfires haven’t spared its agriculture industry. In 2020, the LNU Lightning Complex and Glass Fires in Napa County caused more than $175 million in combined damages to farmers and ranchers. Total agricultural infrastructure losses alone exceeded $35 million, according to a recent report from the California State Senate Insurance Committee.

That level of risk, said Seren Taylor, a legislative advocate at the Personal Insurance Federation of California, is no longer worth it for insurers.

“Those historic financial losses put tremendous upward pressure on commercial insurance rates and have forced many insurance companies to safeguard their solvency […] by limiting the amount of insurance they sell in the high fire-risk areas of the state,” Taylor said.

Climate scientists only expect the situation to get worse. Josué Medellín-Azuara, the associate director of the U.C. Agricultural Issues Center at U.C. Merced, said California farmers should anticipate more extreme weather events, like wildfires. Average temperatures could increase from three to seven degrees Fahrenheit by 2050, placing Golden State growers in a precarious position, according to Medellín-Azuara.

A 2018 report from his colleagues put it plainly: “The increased rate and scale of climate change is beyond the realm of experience for the agricultural community.”

A Way Forward?

California agricultural interest groups are now working to provide a backstop for farmers and ranchers who have lost their fire insurance.

Home and business owners who are denied insurance can turn to the California FAIR Plan, a state program subsidized by private insurance companies that provides a “last resort” option for home and commercial insurance to high-risk properties.

Currently, a clause in the FAIR Plan excludes farmers from accessing the policy. Farmers like Newman can insure his homes and storefront, but not his farming equipment, structures, or automobiles. As the Farm Bureau’s Spiegel put it, “there isn’t a backstop for the commercial agriculture community.”

But that may soon change. In December, Democratic state senator Susan Rubio introduced a bill in the state Senate that would update the plan to include barns, greenhouses, tractors, and other farm equipment and structures currently excluded from the law. The bill, Senate Bill 11, passed the California State Senate Committee by a unanimous vote in April.

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In general, the FAIR Plan costs more than standard home or commercial insurance policies. Both coverage options increase substantially with wildfire risk. This year, the FAIR Plan Association increased insurance rates by 15.6 percent. That increase follows a 20 percent increase in 2018. By definition, the FAIR Plan is funded by a high-risk pool of insurers, who break up the coverage so none are left with a large payout. So it makes sense that it would cost more, Taylor said. “[But] the alternative is worse because it means insurers won’t write [policies] in California or they [won’t] have enough premium to pay the claims. No one wants that.”

The FAIR Plan is far from a long-term solution for California farmers, Taylor added. “The real solution is to help regular insurers come back to these regions,” he said. “And I think that will happen.” But fire insurance rates, and thus, prices, will have to continue to rise, he said, because “insurers have to stay solvent” in our “new normal.”

Newman hopes Sacramento lawmakers can settle the fire insurance issue before late summer, when high pressure builds in the deserts of Nevada and Utah, causing hot, dry wind to blow southwest toward the coast, exacerbating fire conditions across the state.

Newman said it’s “hard to imagine” what he’ll do if another fire rips through his Sonoma Valley property without proper insurance coverage. “I guess this time I’m more likely to hang back and try to fight it,” he said.

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  1. Whether it is U.S. drought, unprecedented Westcoast wildfires, an exodus of sea life due to warming waters, Europe’s hottest year on record, off-the-chart poor-air advisories, unprecedented stalling hurricanes, the mass deforestation and incineration of the Amazonian rainforest, record-breaking floods, single-use plastics clogging life-bearing waters, a B.C. (2019) midsummer’s snowfall, the gradually dying endangered whale species or geologically invasive/destructive fracking or a myriad of other categories of large-scale toxic pollutant emissions and dumps — there has been discouragingly insufficient political courage and will to properly act upon the cause-and-effect of manmade global warming and climate change.

    ‘Liberals’ and ‘conservatives’ (etcetera) are overly preoccupied with boisterously blasting each other for their politics and beliefs thus diverting attention away from the greatest polluters’ moral and ethical corruption, where it should and needs to be sharply focused.

    There's still some hope due to environmentally conscious and active young people who are reaching voting age. Plus, the dinosaur electorate who've been voting into high office consecutive fossil-fuel-promoting or complicit/complacent-neoliberal governments for decades are gradually dying off thus making way for far more climate conscious voters.

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