Castaic residents see 1000% increase in fire insurance

Five year resident, Devon Zemp talks about the effects of the fire insurance price hike on himself and his neighbors at Cimarron Oaks Condominium Complex in Castaic on Friday, 072222. Dan Watson/The Signal

Residents of a Castaic condominium complex are wondering why an estimated 1000% increase to their fire insurance rates would happen in as little as three years, but say answers to this question are hard to come by.  

Cimmaron Oaks, a condominium complex on the 31000 block of The Old Road, is nestled beneath the hills just west of Interstate 5 and south of Parker Road. The area has always been prone to wildfires, but the complex’s insurance premiums have spiked from about $37,000 per year in 2019 to almost $430,000 in 2022, according to insurance documents submitted to The Signal by homeowners. 

The residents of Cimmaron Oaks said they’ve attempted multiple avenues of resistance against this, but keep hitting dead ends — alleging that if insurance companies can charge whatever they want, they will.  

Devon Zemp, who’s lived in Cimmaron Oaks for five years, said the last round of insurance negotiations between the homeowners association and various insurance companies ended up with about 15 companies flat-out denying them coverage. Zemp said the situation has left many in the complex unable to sell their homes.  

“I mean three months ago, they were selling for almost $500,000 and I saw one posted, I think it’s [$420,000], [$430,000] and it’s still sitting,” said Zemp. “So people don’t want to come in because what’s the next [increase] going to be? Is the next one going to be even worse because the second one was bigger than the first one? So is the third one going to be even worse?… I mean they can charge whatever they want.” 

Residents reported their monthly payments for this coverage, excluding their mortgage and their approximately $380 per month HOA fees, are around $700. Zemp said he’s fortunate enough to be able to afford the rate hikes, but said he’s worried for his neighbors who might not be.   

“That’s hard for a lot of people,” said Zemp. “I know at least a couple of people here that couldn’t afford it and they’re gonna be delinquent on fees for a little while until they can catch up.”  

When Jessica Carson and her husband bought their first-ever home in Cimmaron Oaks, they were completely blindsided by the cost of their insurance. Carson said no one had told them of the situation and they didn’t realize how much they were going to pay until two months after they moved in.  

“All I know is we are stuck paying these premiums, basically because we have to have insurance on our homes or the mortgages get involved and it can get really messy for some families,” said Carson. “So these associations are forced to sign these emergency special assessments or special assessments on our behalf and the homeowners really have no say.” 

Carson said she watched notice after notice from the homeowners association, represented by Ross Morgan & Co., detailing the rise of quotes in the past two years going up from about $47,000 to $250,000 to almost $430,000 today.  

Since each of the 91 units in the complex cannot be insured individually, the entire complex must be insured. And since the entire complex must be insured, it exceeds the maximum value to qualify for state-sponsored fire insurance, which leaves homeowners no other option but to accept the best rate they can get from private insurance companies.   

Carson said 30 companies denied them coverage and that homeowners had to settle for coverage from a number of different companies, through a broker, just to be able to secure fire insurance. Most companies cited the property’s location in a brush area as the reason to deny coverage. The ones willing to cover the property are able to charge what many homeowners are saying is, “whatever they want.” 

“We’re very limited as to who will even offer us coverage and which is why they can, I feel personally, quote the prices that they’re quoting,” said Carson. “Because they are one of the only ones that actually sent us a quote.” 

Harvey Rosenfield, consumer advocate and founder of Consumer Watchdog, said that insurance companies are taking advantage of a manufactured crisis to raise premiums, or not offer coverage at all. Rosenfield is concerned, like many homeowners, that this may cause a mini housing crisis if concentrated areas experience this type of insurance premium spike, as people will be unable to sell their homes. 

“Who can keep afford to keep the house when the bank [and] when your mortgage says that you have to have insurance, but you can’t afford to buy it?” said Rosenfield. “So it is a real problem, it’s a crisis. The crisis, the appalling situation, is that the voters gave the commissioner the power to prevent this crisis, and he’s got to do it.” 

Rosenfield is referencing the commissioner of the California Department of Insurance, Ricardo Lara, and contends Lara is not doing enough to ensure that consumers are protected against inflated premiums. 

“The voters were tired of being put through these crises created by the insurance companies and gave the commissioner the power to protect them against this kind of behavior, and the commissioner is not doing it,” said Rosenfield.  

The state insurance commissioner’s office did not respond to a request for comment. 

Rosenfield said there are two crises happening in California that are seeing a recent uptick in consumer watchdogs’ concerns – one is the weather (climate change and drought) and the other is fire insurance companies taking advantage of it.  

“The crisis that the insurance companies have created by arbitrarily trying to raise their rates and pulling out of neighborhoods in California, refusing to sell insurance to people based on the alleged risk of a wildfire loss, [is] the insurance companies taking advantage of one crisis by creating another crisis in the marketplace.”  

While able to put into perspective his overall points on why he believes spiked insurance rates and unpaid claims in California are slipping through the cracks, Rosenfield said they are still looking into Cimmaron Oaks specifically.  

It’s unknown, at the time of this publication, if the surrounding properties have also seen a similar spike in the fire insurance rates or if it’s specific to Cimmaron Oaks.  

One indicator may be the last time the property was inspected by the Los Angeles County Fire Department. On the hillside behind Cimmaron Oaks, the brush did appear to be cleared recently but by whom and when is unknown. Regardless, an inspection by the Fire Department may ease some insurance companies’ concerns.  

When asked when the complex was last inspected, Capt. Mike Ekindjian, of Fire Station 149 in Castaic, presented a map that showed the areas that have recently been inspected. All of the properties surrounding Cimmaron Oaks had a recent inspection. Cimmaron Oaks, however, did not.  

As to why, Ekindjian couldn’t say, but he said that fire stations do not make the decisions as to which tracts are inspected, but instead inspections are directed by the Fire Department Forestry Division’s brush clearance unit.  

At the time of this publication, the brush clearance unit has not responded to multiple requests for comment and has instead redirected The Signal to the Fire Department’s public information unit, which deferred comment back to the brush clearance unit. 

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