When You Become the Risk: Understanding How Insurers Evaluate You — Not Just Your Property — in California's Insurance Market

California's homeowners are facing a crisis unlike anything the state has seen before. Between wildfire losses, soaring reinsurance costs, and rigid regulations, many insurers have stopped writing new business or are non-renewing policies altogether.

For consumers, that's left one big, frustrating question:

"Is my home too risky to insure — or am I the risk?"

In a recent episode of Insurance Hour, industry expert Karl Susman addressed this very issue after a listener wrote in describing a difficult situation:

She had lost a second home to a wildfire, and her claim was still open. When she tried to renew the policy on her primary residence, her insurance company refused — despite that home being located elsewhere.

"Seems no admitted carrier will cover my primary home due to the risk," she said. "Is it possible that insurers view me, not my property, as the risk? And is that even legal?"

Susman's answer? Yes, it's possible. And yes, it's legal.

But there's more to the story — and understanding it can help homeowners navigate California's tightening insurance market more effectively.

Step One: The Two Sides of Underwriting — You and the Property

Susman began by explaining how insurers make decisions about coverage. When you apply for a policy, the company doesn't just look at your house — it looks at you, too.

"When you are purchasing property insurance, there are two factors that the insurance industry looks at," he said. "They're going to look at that property, and they're going to look at you."

The property side includes familiar factors:

• The home's location and wildfire exposure

• The year it was built and type of construction

• Its size, roof type, and updates

• Prior claims made on that specific property

The personal side includes your insurance history:

• How many claims you've made in the past

• What types of claims they were

• How recently those claims occurred

Understanding California's Fire Maps and Risk Ratings: Why Your Neighbor Pays Less for Insurance

It's one of the most common — and frustrating — questions homeowners in California are asking right now:

"Why is my home suddenly uninsurable when my neighbor's policy is still affordable?"

As insurance expert Karl Susman explained in a recent Insurance Hour listener Q&A, it often comes down to how fire risk is mapped and measured — a process that's far more complex, and often less consistent, than most people realize.

From differences in wildfire modeling to accessibility issues and even the way insurers define "zones," the risk rating system in California is under scrutiny as premiums skyrocket and entire communities struggle to find coverage.

This post unpacks the key questions Susman addressed — including how insurers assess risk, what fire maps actually mean, and why your premiums might be three times higher than someone living just a few miles away.

Question 1: How Is Risk Determined in My Neighborhood?

A listener from California asked:

"How is your risk determined if you live in a community of standalone homes, townhomes, apartments, and community areas?"

Susman's answer was straightforward — but revealing.

Insurance companies rely on dozens of data points to determine a property's wildfire risk. Some of the biggest include:

• Location and topography — How close your home is to forested or brush-heavy areas.

• Proximity to fire protection — How near the property is to a fire hydrant or a staffed fire station.

• Access for emergency vehicles — Whether fire trucks can easily reach and turn around at your property.

• Local infrastructure — Road width, slope, and escape routes.

• Fire history and vegetation patterns.

"They're going to see where your property is," Susman explained. "How close is it to a fire hydrant? To a fire station? What's the likelihood of there being a fire? Can a fire truck get up there and turn around, or is it up a narrow, snaking road? All sorts of things go into what insurance carriers look at."

The takeaway: even within the same ZIP code or community, homes can have drastically different risk scores based on micro-geography and accessibility.

Q ...

Family Drivers and Auto Insurance: Why Failing to Add a Household Driver Can Cost You Everything

When it comes to auto insurance, one of the most common — and dangerous — mistakes drivers make is failing to add all household members to their policy.

It might seem like a harmless oversight. Maybe you've heard from a friend that your teenage son or daughter is automatically covered, or that your insurance company doesn't need to know who's driving as long as they live under your roof.

But as insurance expert and Insurance Hour host Karl Susman explained in a recent listener Q&A episode, that kind of advice can cost you dearly.

In this insightful segment, Susman answered a caller's question about whether her son needed to be added to her policy. Her friends had advised against it, assuring her that he would be "covered anyway." Susman's response was firm — and enlightening.

"You never want to give an insurance company a great excuse to deny a claim," he said. "If something feels wrong, it probably is."

The Question: "Do I Really Need to Add My Teen Driver?"

The caller's question is one that many parents can relate to. Adding a teenage driver to an auto insurance policy can be expensive — sometimes dramatically so.

So, it's tempting to avoid disclosing that new driver, especially if they only drive occasionally. After all, friends may insist, "He's covered if something happens, right?"

But as Susman explained, that's not how insurance works — and it's a mistake that could leave you financially exposed.

"If your son is going to be driving your car with any regularity," Susman said, "you need to add him or exclude him. Because what you're doing otherwise is setting yourself up for the insurance carrier to deny your claim."

How Auto Insurance Coverage Actually Works

Auto insurance policies are contracts — detailed agreements between you and your insurance company. Every contract clearly outlines who is insured, what vehicles are covered, and under what conditions coverage applies.

When you apply for a policy, you're asked to list:

• All regular drivers of the insured vehicles.

• All household members, even if they don't currently drive.

That second point often surprises people. But insurers require it for good reason:

1. It ensures transparency about potential drivers.

2. It allows insurers to assess risk accurately.

3. It prevents "surprise drivers" from showing up after a loss.

California's Insurance Commissioner Answers the Tough Questions: What Homeowners Need to Know About the State's Insurance Reform

As California's insurance crisis continues to spread, homeowners across the state are desperate for answers — and this week, they finally got a chance to ask them.

In a virtual town hall hosted by ABC 10 Sacramento on July 2, 2024, California Insurance Commissioner Ricardo Lara fielded questions directly from frustrated homeowners about why their premiums are skyrocketing, why insurers are pulling out of certain zip codes, and when they might finally see relief.

"It's a horrible situation right now," admitted insurance expert Karl Susman, speaking with ABC 10's Becca Habegger. "There's no way to put it any other way."

But amid the frustration, Lara shared some important developments — including new regulations that could reshape how insurance companies do business in California, and possibly help bring coverage back to wildfire-prone regions.

1. "Why Are Insurance Companies Allowed to Cherry-Pick Zip Codes?"

One of the first questions Lara faced came from a homeowner angry about insurers refusing to cover entire neighborhoods based on risk.

"Why are insurance companies allowed to cherry-pick the zip codes they want to insure?" the homeowner asked.

It's a question on the minds of thousands of Californians who have been dropped by their insurers or seen their rates triple, even when they've never filed a claim.

Lara's response revealed a key difference between the insurance industry and other types of regulated utilities:

"Unlike public utilities," he explained, "insurance companies can limit where they write policies."

In other words, while the state can regulate how insurers do business, it can't force them to offer coverage everywhere.

That's a bitter pill for homeowners in high-risk areas — especially those living near wildfire zones — who feel abandoned by companies they've trusted for decades.

2. The Sustainable Insurance Strategy: A Deal to Bring Coverage Back

To address that inequity, Lara said his department has reached what he called a "historic agreement" with insurers as part of his Sustainable Insurance Strategy, a reform package first announced in September 2023.

"We have reached this historic agreement with insurance companies to write coverage for properties in wildfire risk areas," he said.

Under the plan, insurers would be allowed to use forward-looking catastrophe models — sophisticated risk-assessment tools that can project future wildfire losses —

Decoding Catastrophe Models: Karl Susman's Testimony and What It Means for California's Insurance Future

California's property insurance market stands at a crossroads. Wildfires, inflation, and regulatory gridlock have pushed many insurers to the brink, leading to policy non-renewals, coverage restrictions, and widespread consumer frustration.

At the heart of the debate over how to fix this broken system lies a single, powerful concept: catastrophe modeling, often shortened to CAT modeling.

In a recent California Department of Insurance (CDI) workshop, industry expert and Insurance Hour host Karl Susman delivered testimony supporting the state's proposed reforms to allow insurers to use catastrophe models in their rate filings — and in doing so, sought to dispel some of the misinformation surrounding them.

His remarks captured not only the urgency of California's insurance crisis but also the role that science, data, and transparency must play in rebuilding a sustainable marketplace.

Why the Workshop Mattered

The CDI's workshop on catastrophe modeling was part of the Sustainable Insurance Strategy, a comprehensive plan launched by Insurance Commissioner Ricardo Lara to stabilize California's insurance system.

The proposed changes would, for the first time, allow insurers to use forward-looking catastrophe models — sophisticated tools that combine climate science, historical data, and advanced analytics — to predict potential future losses.

The move has sparked both optimism and controversy. Proponents argue it's essential for solvency and long-term affordability. Critics claim it opens the door to "black box underwriting" — secret, unaccountable algorithms that could raise rates unfairly.

Susman's testimony tackled these issues head-on.

"We Know Why We're Here": A Market in Shambles

Susman began by acknowledging the elephant in the room — California's insurance crisis.

"We know why we're here," he said. "The California insurance marketplace is currently in shambles. Insurers are non-renewing policies, not offering policies, and leaving the state altogether."

The causes, he explained, aren't mysterious: insurers have repeatedly pointed to the regulatory environment as a major reason for their withdrawal.

Under Proposition 103, insurers must receive state approval for any rate changes — a process that can take years. During that time, inflation, wildfire exposure, and reinsurance costs can shift dramatically, leaving companies operating at a loss.

"Most of them claim the reasons for taking these actions are due to the regulatory environment that currently exists," Susman said.

In this episode of "Insurance Hour," host Karl Susman dives into the complexities of the California insurance market with special guest Benjamin McKay, CEO and Executive Director of the Surplus Lines Association of California. The discussion covers the distinction between admitted and non-admitted (surplus lines) insurance, the challenges faced by insurers due to regulatory processes like Prop 103, and the current crisis in the California insurance market exacerbated by wildfires and rising costs. McKay explains how surplus lines provide flexibility in underwriting unique and high-risk policies that standard insurers avoid. They also touch on the Leslie list, which ensures the financial stability of surplus lines insurers, and the importance of managing California's forests to mitigate wildfire risks.

Wanna text us?

Insurance Hour is hosted by renowned insurance expert Karl Susman. Karl is a frequent guest on television stations such as ABC, CBS, Spectrum, The CW and FOX, and now his popular radio program is available online throughout California and world-wide.

Listeners can now tune in to Insurance Hour on great AM radio station KMET throughout the state of California.

In addition to traditional radio, Insurance Hour is available on several popular streaming platforms, ensuring that listeners can access the show at their convenience.

Audiences worldwide can now enjoy Insurance Hour at InsuranceHour.com, on YouTube, Amazon Music, Tuneln, Alexa, Apple Podcasts, and the iHeartRadio app.

For more information about "Insurance Hour" and its programming, please contact Lara Starr at [email protected]

Navigating California's Insurance Crisis: How Surplus Lines Are Filling the Gap

California's insurance market is in flux. With major carriers retreating, homeowners scrambling for coverage, and regulators rewriting decades-old rules, the industry finds itself at a critical turning point.

In this episode of Insurance Hour, host Karl Susman sits down with Benjamin McKay, CEO and Executive Director of the Surplus Line Association of California (SLA), to discuss one of the least understood but most vital segments of the insurance world — surplus lines.

McKay explains what surplus lines are, how they function within California's complex regulatory system, and why they've become a lifeline for many homeowners and businesses as traditional insurance markets tighten.

The discussion also unpacks how Proposition 103, consumer protection rules, and new Department of Insurance reforms intersect with surplus lines — and what it all means for the future of insurance in California.

The Surplus Lines Sector: California's Safety Valve

When standard insurance companies won't write a policy — because a property is too risky, too remote, or too unique — the surplus lines market steps in.

Surplus lines insurers are often referred to as "non-admitted" carriers. They don't operate under the same rate and form filing requirements as traditional ("admitted") insurers, which gives them flexibility to underwrite high-risk properties that standard insurers avoid.

McKay describes the system as California's "safety valve."

"Surplus lines carriers exist to insure risks that the admitted market can't or won't," McKay explains. "We're not a replacement for the standard market — we're the release valve that keeps the system functioning."

This flexibility allows surplus lines carriers to:

• Cover wildfire-prone properties.

• Write specialized commercial risks.

• Customize coverage for unique or high-value homes.

But that freedom comes with strong oversight. Every surplus lines transaction must go through a licensed surplus lines broker and is tracked and reported to the SLA, which monitors compliance and collects data for the state.

The Difference Between Admitted and Non-Admitted Insurers

At the heart of the discussion is the difference between admitted and non-admitted carriers.

Revolutionizing California Insurance: Understanding the Sustainable Insurance Strategy and Market Reforms

California's insurance market is in turmoil. From homeowners unable to find coverage to insurers halting new business altogether, the state's property insurance system is facing what many call a "market collapse."

But amid the chaos, California is now rolling out a sweeping reform package designed to modernize the state's outdated regulatory structure — and, hopefully, restore balance to the insurance ecosystem.

At the center of it all is the California Sustainable Insurance Strategy, spearheaded by Insurance Commissioner Ricardo Lara and backed by Governor Gavin Newsom's administration.

In a recent episode of Insurance Hour, insurance expert Karl Susman broke down this ambitious reform plan, cutting through the noise and misinformation that have clouded the public conversation. This post unpacks those insights and explains how the new strategy aims to reshape California's insurance landscape.

The Broken Market: Why Change Is Urgent

If you've tried to get homeowners insurance in California lately, you already know how bad things have gotten.

Most homeowners report calling ten different carriers — only to have eight immediately say "no." One might take your information and never call back, and the lucky one might eventually offer a quote, often through non-admitted carriers or the state's FAIR Plan.

This isn't a temporary glitch. It's the result of years of:

• Rising wildfire risk and catastrophic losses.

• Inflation driving up rebuilding costs.

• Regulatory lag that has kept insurers from adjusting prices or underwriting models quickly enough to stay solvent.

Without reform, California risks losing even more private insurers — leaving the FAIR Plan as the only option for many, which was never its purpose.

"We are far, far away from a competitive marketplace," Susman said. "When there's no competition, you not only can't get quotes, but the prices you do get are astronomical."

Introducing the Sustainable Insurance Strategy

To address this crisis, Commissioner Lara introduced the California Sustainable Insurance Strategy (SIS) — a multifaceted framework aimed at stabilizing the market, restoring competition, and modernizing decades-old regulations.

The Sustainable Insurance Strategy is built around four key p ...

California's New Insurance Options: How State Reforms Aim to Protect Homeowners and Businesses in High-Risk Zones

For years, California homeowners and business owners have faced an insurance nightmare — non-renewals, skyrocketing premiums, and shrinking coverage options, especially in wildfire-prone areas.

But now, new measures from the California Department of Insurance (CDI) and the Governor's office are signaling a potential turning point.

As NBC Los Angeles (KNBC) reported in its June 14, 2024 broadcast, the state is rolling out new wildfire risk maps, policy-writing incentives, and regulatory reforms designed to make sure Californians aren't left without coverage.

Insurance expert Karl Susman joined NBC's Lolita Lopez to break down what these changes mean — and how they could help both homeowners and business owners regain protection and peace of mind.

The Crisis That Sparked Reform

For years, the situation has been dire.

Wildfires, rising rebuilding costs, and restrictive insurance regulations have combined to drive many major insurers — including State Farm, Allstate, and Farmers — to either stop writing new business or drop existing policies in high-risk areas.

That has forced hundreds of thousands of Californians into the California FAIR Plan, the state's insurer of last resort.

Originally intended as a temporary safety net, the FAIR Plan has now become a primary coverage source for many homeowners.

"Homeowners have found themselves being dropped from their insurance policies for various reasons and forced to turn to the California FAIR Plan as their only option, instead of the option of last resort as it was intended," Lopez reported.

The result: incomplete coverage, higher premiums, and frustration across the state.

The State Steps In: A New Blueprint for Insurance Equity

In response, the Department of Insurance has unveiled a sweeping plan to rebalance coverage availability and ensure insurers return to distressed areas.

The plan includes several key innovations:

1. A First-Ever Wildfire Risk Map identifying ZIP codes where insurers must increase policy offerings.

2. Mandated Mitigation Credits — requiring insurers to reward homeowners and business owners who take steps to reduce wildfire risk.

In this episode of "Insurance Hour," host Karl Susman delves into the history and impact of Proposition 103 on California's insurance industry. He begins by setting the scene in the 1980s, discussing the economic and social climate that led to the creation of this landmark regulation. Susman explains the initial goals of Proposition 103, which included reducing insurance premiums and increasing oversight of the industry. He provides a detailed analysis of the proposition's key provisions, including the mandatory 20% rate reduction and the establishment of an elected insurance commissioner.

The show also explores the broader implications of Proposition 103, including its effects on the insurance market, such as the exodus of some insurance carriers from California and the challenges of maintaining profitability under the new regulations. Susman highlights the ongoing amendments and changes to the proposition over the years, illustrating how it has evolved to address new challenges and clarify initial ambiguities. He concludes with a discussion on the current state of the insurance industry in California and the potential future of Proposition 103, emphasizing the need for a balance between consumer protection and a healthy, competitive insurance market.

Wanna text us?

Insurance Hour is hosted by renowned insurance expert Karl Susman. Karl is a frequent guest on television stations such as ABC, CBS, Spectrum, The CW and FOX, and now his popular radio program is available online throughout California and world-wide.

Listeners can now tune in to Insurance Hour on great AM radio station KMET throughout the state of California.

In addition to traditional radio, Insurance Hour is available on several popular streaming platforms, ensuring that listeners can access the show at their convenience.

Audiences worldwide can now enjoy Insurance Hour at InsuranceHour.com, on YouTube, Amazon Music, Tuneln, Alexa, Apple Podcasts, and the iHeartRadio app.

For more information about "Insurance Hour" and its programming, please contact Lara Starr at [email protected]