Camino, CA (June 29, 2024) — Winery owners in El Dorado County are facing significant increases in fire insurance costs, largely due to the aftermath of severe wildfires like the Caldor Fire. With major insurers pausing or restricting new policies, many are forced to rely on the California FAIR Plan, which is considered the insurer of last resort. This shift has caused premiums to skyrocket, with some tripling in recent years. Additionally, the FAIR Plan has experienced delays and issues in processing new policies due to a surge in demand and staffing challenges.
The ongoing insurance crisis in California is posing significant challenges for small businesses. Eric Hays, owner of Chateau Davell Winery, which has been in operation for about 15 years, is among those affected. Hays’s fire insurance costs have seen a dramatic increase, starting at around $3,000 and now soaring to $20,000 this year.
“It’s not something that was in our business plan or our expenditure costs. So having to come up with that money, it’s coming out of our profit honestly,” Hays said.
Due to this substantial increase, Hays has been forced to raise prices for the first time since opening. Despite enduring inflation and rising costs over the years, this insurance hike necessitated the price adjustment.
“We held off for a long time, you know, even with inflation, costs, cost of living, fires, all of that. But we finally have to give in,” he added.
This $20,000 annual insurance cost averages over $1,600 a month, surpassing the cost of the mortgage for the winery’s building. Hays expressed concern about potential future increases, stating, “That’s what’s concerning. We’re making it work this time but another jump like that, it could be devastating.”
Hays is calling for regulatory or governmental intervention to assist homeowners and business owners in navigating these challenges. “It’d be great if there were some sort of regulation with the insurance companies or some sort of assistance from the state or the feds, something to help,” he said.
In response, the office of California’s insurance commissioner issued a statement encouraging businesses with insurance concerns to contact the Department at 800-927-4357 or online at Getting Help. The commissioner, Ricardo Lara, has announced a plan to increase the availability of insurance policies in wildfire-prone areas as part of his Sustainable Insurance Strategy.
The situation at Chateau Davell Winery underscores the broader issue of rising insurance costs in California, which continues to threaten the viability of small businesses statewide.
