Vikrant Shekhawat : Jan 12, 2025, 01:00 AM
Los Angeles Fire: The massive forest fire in Los Angeles, California has not only turned thousands of homes and businesses into ashes, but it has also put the home insurance sector in serious trouble. People who thought their insurance would protect them from arson are now feeling helpless.Increasing fire risk and response of insurance companiesThe risk of forest fires in California is increasing year after year. Sensing this risk, many home insurance companies have limited their services in this area. This move by insurance companies is deepening the insurance crisis in Los Angeles and surrounding areas.Recently, people whose homes and properties have been burnt to ashes were hoping that insurance companies would help them. But the truth is that insurance companies had already stopped issuing policies from this area.Insurance companies' decision to stop coverageIn 2023, 2 out of the top 7 insurance companies in California had either stopped issuing new home insurance policies or limited them extremely. State Farm, one of the largest insurance companies in California, had discontinued coverage of 72,000 homes and apartments just a few months before the Los Angeles fire. This coverage was discontinued only last year.Huge figure of economic lossThe figure of economic loss caused by the California forest fire is shocking. According to a report by The Guardian, the forest fire has caused a loss of about 52 to 57 billion dollars so far. If we look at it in Indian currency, this amount is equivalent to about Rs 5 lakh crore.A spokesperson for State Farm said that the insurance company had canceled the policies of hundreds of homeowners in areas like Pacific Palisades. This is the same area which is now in the grip of a fierce forest fire. According to estimates, about $ 10 billion (about Rs 86 thousand crores) will be needed to compensate for the losses in this area.Thousands affected by cancellation of insurance policy
According to an analysis by the San Francisco Chronicle, more than 1 lakh Californians have been dropped from their home insurance coverage since 2019. The main reason for this is that incidents of forest fires are increasing continuously in this area. Insurance companies are no longer ready to take this risk.Government insurance program is also not a solutionHomeowners who are not getting policies from private insurance companies have to resort to the government's Emergency State Insurance Program. But this program is not only expensive, but its coverage limit is also limited.Under the government scheme, a maximum of $ 3 million (about Rs 25 crore) is paid. This amount is much less than the actual value of the houses that have recently turned to ashes in the fire.Expensive premium and limited coverageIf insurance companies want to give policies in fire-affected areas, they have the option to increase premium rates. But given the way the forest fire has wreaked havoc in Los Angeles, this step can also be quite challenging.Many experts believe that insurance companies may completely avoid giving policies in these areas. Even if a policy is issued, its premium will be so expensive that it will be difficult for a common citizen to buy it.Difficulties of Los Angeles residentsHomeowners whose houses have been burnt to ashes in the fire will have to do paperwork for months for insurance claim. Apart from this, the process of final settlement can also be quite complicated.In case of not getting help from insurance companies, many people may also be forced to take legal steps. But this path is also not easy.Future challengeThe home insurance sector in Los Angeles and across California is facing a major crisis. The threat of forest fire is increasing continuously, due to which insurance companies are shying away from taking risks.This is directly affecting those people who had invested all their life savings in building a house.ConclusionThe California forest fire is not only a natural disaster but it is also creating an economic crisis. Homeowners are suffering huge losses due to insurance companies exiting the market.In this situation, the government should not only take measures to reinstate insurance policies, but also take necessary steps to reduce the risk of fire. This is a difficult time for the residents of Los Angeles, and they need to find new solutions to protect their properties.
According to an analysis by the San Francisco Chronicle, more than 1 lakh Californians have been dropped from their home insurance coverage since 2019. The main reason for this is that incidents of forest fires are increasing continuously in this area. Insurance companies are no longer ready to take this risk.Government insurance program is also not a solutionHomeowners who are not getting policies from private insurance companies have to resort to the government's Emergency State Insurance Program. But this program is not only expensive, but its coverage limit is also limited.Under the government scheme, a maximum of $ 3 million (about Rs 25 crore) is paid. This amount is much less than the actual value of the houses that have recently turned to ashes in the fire.Expensive premium and limited coverageIf insurance companies want to give policies in fire-affected areas, they have the option to increase premium rates. But given the way the forest fire has wreaked havoc in Los Angeles, this step can also be quite challenging.Many experts believe that insurance companies may completely avoid giving policies in these areas. Even if a policy is issued, its premium will be so expensive that it will be difficult for a common citizen to buy it.Difficulties of Los Angeles residentsHomeowners whose houses have been burnt to ashes in the fire will have to do paperwork for months for insurance claim. Apart from this, the process of final settlement can also be quite complicated.In case of not getting help from insurance companies, many people may also be forced to take legal steps. But this path is also not easy.Future challengeThe home insurance sector in Los Angeles and across California is facing a major crisis. The threat of forest fire is increasing continuously, due to which insurance companies are shying away from taking risks.This is directly affecting those people who had invested all their life savings in building a house.ConclusionThe California forest fire is not only a natural disaster but it is also creating an economic crisis. Homeowners are suffering huge losses due to insurance companies exiting the market.In this situation, the government should not only take measures to reinstate insurance policies, but also take necessary steps to reduce the risk of fire. This is a difficult time for the residents of Los Angeles, and they need to find new solutions to protect their properties.