California, First State to Buy Wildfire Insurance

Three elected officials in the California state have proposed legislation that allows the state to buy private disaster insurance to prevent overspending the budget allotted for the year.

State Insurance Commissioner Ricardo Lara, Sen. Bill Dodd, and state Treasurer Fiona Ma are behind the proposed plan. Depending on the policy, if the California state spends more than it’s budget of $443 million for firefighting, it might be reimbursed $400 million.

In addition, victims of the fire that have no insurance at all can get help from the state to finance rehabilitation and more. This will be under the wildfire insurance bill that state officials are pursuing.

Wildfires in California frequently happens and these brought big disasters and destroy a lot of properties in the state. The biggest fires in the state’s history happened last year, with over 22,700 structures burned to the ground and more than 100 people killed. The state spent a total tab of 948 million for search and rescue, rehabilitation and assistance.

According to Ma, given that the state is prone to a lot of wildfires, there should be some sort of ‘protection’ from financial exposure. She claimed, “Most of us have house insurance, auto insurance, maybe earthquake and flood insurance. Why doesn’t the state have disaster insurance to reduce financial exposure?”

Meanwhile, there are some experts who believe that this move is ‘efficient’ but only foolish insurers would sell wildfire insurance to California, knowing that the state is prone to it.