Connecting the Density Dots

Sometimes connecting the dots is hard--other times it's pretty easy.  Last week's connection was pretty easy.  The Chronicle ran two pieces on density, but no one there connected the dots so let's do it here.  The front page piece was "Density" cited in canceled policies".  It noted property insurers consider two flavors of density--how closely packed together houses are and how many policies any one insurer has in an area.  Both are causing the insurance crisis in California to spiral up.  Insurers don't like the risk of a fire in one house jumping to its neighbors.  And they realize multi-family means multi-kitchen, etc.  So "you're canceled".

Two pages later there was a headline "Court rules lawmakers can override local housing limits"--to force more, you got it, density.

Limits on housing density approved by local voters can be overridden by lawmakers, a California appeals court ruled, upholding legislation that was intended to encourage construction of small apartment buildings.  The law, SB10 by state Sen. Scott Wiener, D-San Francisco, allows city and county governments to authorize new housing with up to 10 units in some urban areas, including those near transit, without conducting environmental studies.

“The housing shortage is a matter of statewide concern,” and SB10 is “reasonably related to addressing that concern,” Justice Brian Hoffstadt said in Thursday’ 3-0 ruling, which upheld a judge’s decision.Hoffstadt cited previous legislation aimed at addressing the shortage of affordable housing, starting with a 1965 law that required local governments to adopt long-term plans to promote adequate housing.

You read that right.  This has been an issue since 1965.  Why?  Because it's always going to be an issue.  You cannot outbuild the global demand to live in the Bay Area--unless you make it notably less livable vis a vis water, traffic, grid stability, crime, street parking, et al.  Those are symptoms of density.  Some stupid judge can't change that, and neither can the legislature.  If you live next to a project that is building three, four or five units on a 5,000 square foot lot and you lose your insurance coverage, will you have a cause of action?  Against whom?  The state?  Good luck with that.

And if you are thinking insurers can't or won't cancel you, think again.  No explanation required.  They could easily use housing density as the deciding factor in where to reduce their policy density.  The Law of Unintended Consequences will not be denied.

Comments

[Joanne]

Could insurers also deny insurance for all those multi family units??

[Joe]

I imagine they could and probably for multiple reasons--or they just jack up the price and send people to the state option (FAIR).

I had an off-line question about house density (we have a few shy readers), asking how the insurers would know what is next to you? Here's how:

Across the U.S., insurance companies are using aerial images of homes as a tool to ditch properties seen as higher risk.

Nearly every building in the country is being photographed, often without the owner’s knowledge. Companies are deploying drones, manned airplanes and high-altitude balloons to take images of properties. No place is shielded: The industry-funded Geospatial Insurance Consortium has an airplane imagery program it says covers 99% of the U.S. population.

The array of photos is being sorted by computer models to spy out underwriting no-nos, such as damaged roof shingles, yard debris, overhanging tree branches and undeclared swimming pools or trampolines. The red-flagged images are providing insurers with ammunition for nonrenewal notices nationwide.

“We’ve seen a dramatic increase across the country in reports from consumers who’ve been dropped by their insurers on the basis of an aerial image,” said Amy Bach, executive director of consumer group United Policyholders.

[Joe]

I'm not sure what Josh Becker knows about insurance modeling, but he should have at it anyway. From today's Merc:

State Sen. Josh Becker, a Menlo Park Democrat, has introduced a bill that would require insurers to consider the state’s efforts to thin flammable brush and trees as well as property owners’ steps to make their homes more fire resistant, such as covering vents and clearing vegetation. Those efforts would need to be incorporated into their risk modeling to determine coverage decisions and costs.

“What we’re seeing is that in addition to the impact of home hardening, that forest treatment is going to have a big impact on wildfire risk, and that’s not being taken into account,” Becker said. “You have to take these into consideration.”

Becker’s bill, SB 1060, comes as state officials scramble to prop up a home insurance market on the brink of collapse, with major insurers restricting coverage and refusing to renew policies in many parts of the state. The bill is scheduled for its first hearing before the Insurance Committee on April 24.

The American Property Casualty Insurance Association, which represents insurers, said that while it supports wildfire mitigation efforts such as home and community hardening, the bill “has several complicating factors to consider.”

“The California Department of Insurance already requires insurers that use risk models to take into consideration specific mitigations and provide consumers discounts,” the industry association said.
--------------------
That last bit about discounts for specific mitigations could be more transparent. As a homeowner in Tahoe in a development that has spent large sums of time and money on defensible space, I'm not sure that is being taken into account. I ask, but the answers are vague.