Comedian Rob Schneider blasts insurance giant State Farm and all its ‘phony commercials’ for canceling policies in California amid LA area wildfires — but here's what he's missing

Old rules and new consequences

An oft-cited cause of insurance flight from California is Proposition 103, which passed in 1988.

Insurers in California must now ask permission to raise insurance premiums from the state government agency California Department of Insurance.

That’s unlike most states, where market competition and risk-based data is used to price policies.

Voters narrowly passed the initiative limiting insurance rates at the time, and it’s remained controversial ever since.

The insurance industry has opposed the rule from the get-go, spending $80 million in a failed attempt to defeat the initiative, according to Consumer Watchdog.

Companies also unsuccessfully appealed the law in court after it passed, the Los Angeles Times reported.

Proponents of the insurance industry argue that the premium increase approvals from the state are too slow, and that means insurers can’t afford to offer coverage for Californians.

Technology like credit scores for drivers and risk modeling for homes also aren’t permitted in California, and insurers say that inhibits them from providing accurate pricing for their customers.

Without the accurate pricing, insurers say they can’t offer coverage in the state at all.

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Why now?

The exodus of insurers from California is relatively recent, given the cause cited by the industry is a rule from 1988.

Californian insurers lost $12 billion in 2018 following wildfires, as insurance companies claim payouts outpaced the amount of money indemnifiers received in monthly policy payments.

It was around then when insurers really started jumping ship, Salon reported, as increased fire risk ran into regulatory limits on raising insurance premiums.

There’s also the rising cost of reinsurance, a coverage policy for insurance companies, that’s pushing up prices, according to Barron’s.

Notably, insurance companies are also fleeing Florida where there is no government limit on raising insurance premiums.

Something Florida does have in common with California is its disaster prone geography and sensitivity to climate change.

Proposition 103 had saved Californians more than $150 billion by 2018, according to the Consumer Federation of America, even if it limited insurance companies’ ability to operate in the Golden State.

What to do if your house burns down after your insurer cancels your policy in California

If you live in southern California and your home has burned down, federal help is on the way.

Uninsured homeowners that have had their property burn down could receive help from the Federal Emergency Management Agency (FEMA), now that the federal government has approved major disaster assistance for the affected regions.

“Assistance can include grants for temporary housing and home repairs, low-cost loans to cover uninsured property losses and other programs to help individuals and business owners recover from the effects of the disaster,” according to the FEMA website.

If your insurer wants to discontinue your policy or raise your premiums, they should infrom you at least a month before your policy’s renewal date, according to the Consumer Financial Protection Bureau.

That gives you time to get other insurance coverage before your current policy lapses.

You can also ask your insurance company to reconsider, and have an insurance agent review your file to undo your cancellation.

Many states have a Fair Access to Insurance Requirements (FAIR) plan option, which is for hard-to-insure Americans and is much more likely to accept your application.

There are options out there for your specific insurance needs, but allowing a lapsed period in coverage could prove costly.