California insurance commissioner OK’s increased wildfire insurance limits for wineries, vineyards, ranches

Vintners, wine grape growers, ranchers and other farming operations that lost conventional commercial property coverage last year in the aftermath of several years of devastating wildfires can start buying new policies from California’s “insurer of last resort” as of next month.

The Department of Insurance on Friday said Commissioner Robert Lara approved new commercial coverage through the FAIR Plan for farm structure risks starting Feb. 1.

This action follows the rapid passage and signing of Senate Bill 11 last July, amid reports from vintners and growers in rural North Coast areas from around the beginning of 2021 about big jumps in renewal pricing, reduced coverage or being dropped by a carrier.

Large North Coast fires in 2017, 2019 and 2020 caused substantial insurance losses for wineries and farmers in Sonoma, Lake and Napa counties. That’s reflected in just 8% of the state’s agribusiness insurance market, total incurred losses were 45% of the statewide total for those years, according to the department.

California agricultural and winery insurance losses from fire in 2017-2020. (California Department of Insurance)
California agricultural and winery insurance losses from fire in 2017-2020. (California Department of Insurance)

Insurance carriers that changed their underwriting criteria for California wineries in 2020 made up 60% of that market, according to the department. Altered policy requirements for coverage and pricing included requiring a certain defensible space, distance from wildland areas, or specific roof materials. For the state’s agribusiness insurance market overall, companies with such changes in their underwriting criteria made up 76% of that market in the state.

And a newly released Silicon Valley Bank survey of West Coast vintners, with many from the North Coast, found that 70% of respondents saw insurance costs increase last year, 8% were unable to obtain insurance and 27% couldn't get sufficient coverage.

Lara in November pushed the FAIR Plan, an association of all state-admitted insurance companies that offers policies when conventional coverage is denied, to increase its combined coverage limits. Under the Division I commercial property program, the limit rose to $8.4 million from $4.5 million. The Division II businessowners program limit doubled to $7.2 million from $3.6 million.

The department said it called on the FAIR Plan to address additional commercial coverage issues but wanted the limits increases to roll out as soon as possible. The other matters, which involve expanding availability to “all comers,” would be addressed in the months ahead, the agency said.

“Agriculture is critical to our continued economic recovery. That’s why when leaders in this sector first shared their challenges in getting insurance coverage, we listened. We worked with (legislation author) Senator Rubio, Legislative leaders and the Governor to pass SB 11 to help address these issues,” said Lara in the announcement. “The Department of Insurance is changing how the FAIR Plan operates as part of a broader solution to help protect these businesses, especially those vulnerable to climate-intensified wildfires.”

Napa County Farm Bureau was instrumental in elevating the attention of Sacramento to wildfire insurance woes for vintners and growers.

"This is welcome news and builds on the success the Farm Bureau has had in securing insurance coverage for our ag businesses through the FAIR Plan," said Johnnie White, farm bureau president, in a statement.

Jeff Quackenbush covers wine, construction and real estate. Before the Business Journal, he wrote for Bay City News Service in San Francisco. He has a degree from Walla Walla University. Reach him at or 707-521-4256.

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