After CZU destroyed their home, their insurance soared more than 600%. A new proposal could push it even higher

Tony and Mary Madden were paying about $2,000 in home insurance before their Boulder Creek home burned down in the CZU Lightning Complex fires five years ago. 

Now, under new rates proposed by the California FAIR Plan — the insurer of last resort for policyholders living in high-risk fire areas — they could see their annual fee go up more than 10 times that, to $21,000, on their rebuilt three-bedroom, three-bathroom home. 

“I can’t really believe it’s going to happen. It’s a ridiculous amount of money for the house,” said Tony. “I just don’t get the logic for it.”

The Maddens are one household among about 11,000 in Santa Cruz County that has coverage through the FAIR Plan — a pool of private insurers that typically provides less coverage for fires and charges higher rates than commercial policies. On Sept. 29, the FAIR Plan submitted its proposed new premiums – which on average would increase rates statewide by 35.8% — to the California Department of Insurance for review. The proposal represents the largest increase the plan has sought in seven years and reflects the rising costs of a growing number of severe wildfire damage claims, according to Insurance Business magazine.

The department could reduce or adjust the insurer’s proposed premiums and those new rates would go into effect for policy renewals after April 1, 2026. Individual households under the FAIR Plan won’t all see their premiums grow at the same rate, but could have hikes or drops depending on the properties’ fire risk and other factors. 

Several Santa Cruz County residents living in the mountains told Lookout they were shocked to see the proposal and don’t know how they’ll make ends meet if their premiums increase. They’re concerned they’ll have to cut back on things like eating out and traveling, or regular home upkeep.

Families like the Maddens plan to live out their lives as long as they can in their homes because they love their communities and the natural landscape. In some cases, they purchased their mountain homes because they were the affordable option in the county — named the most expensive rental market in the country. 

In August 2023, the Maddens told Farmers Insurance that they had successfully finished rebuilding their home. A month later, Farmers dropped their contract and they couldn’t get any other insurer to take them. After exhausting their options, they got a fire insurance policy under the California FAIR Plan. 

The FAIR Plan told the couple their new annual rate for just fire coverage: $14,212.40 – significantly higher than the $2,000 they previously paid for their entire Farmers policy, which provided comprehensive coverage. Add in the additional insurance they had to get to cover their home beyond fires, and the total annual bill is more than $14,900. In one year, their annual rate went up more than sixfold. 

“I was sick to my stomach,” said Madden. 

Mary, 64, is retired and on Social Security and Tony, 61, is a veterinarian in between jobs. Tony said they were lucky to have had his vet practice to sell after their home burned down and have been able to get by with the cash from that sale, the several hundred thousand dollars Farmers gave them to rebuild after the fire, and donations like furniture and clothes, but they’re forever changed by the loss of their home. 

“There’s no way you’ll ever recover from that financially — at least we were able to rebuild,” he said. “I like to not think about it.” 

Then, this month, a new hit came. Tony learned that the FAIR Plan is proposing rate increases that average 47.7% for policyholders in his ZIP code. If approved by the state Department of Insurance as is, and if the average increase for that ZIP code holds for the Maddens’ home, he and his wife would pay around $21,742.70 in total for home insurance when their policy renews next year. Madden said he can’t really grasp it — he’s in disbelief. 

The proposed new rates vary across the county, with the Davenport and North County area seeing the lowest average increase of 9%, and the Brookdale area with the highest increase at 50.9%.

Felton resident Glenn Glazer, 62, pays about $9,000 for the FAIR Plan. If the department approves the FAIR Plan’s proposal, his rate could go up by 50% to more than $13,000. To make ends meet, he said he and his partner would have to stop doing most of the things they enjoy.

“I was astonished, really angry,” he said of seeing the proposal. “All of the good things in life are going to go away. All of the extras — traveling, going to restaurants, going out — fun things.”

Before Farmers dropped him in 2020, he paid about $4,500 annually for home insurance with the company. The increased FAIR Plan premium has led him to cut expenses in other areas. The couple started deferring home improvement and maintenance projects, such as replacing their aging driveway. 

Because the FAIR Plan was too much and he couldn’t find another private company to cover damages beyond fire, Glazer decided against finding an additional wraparound policy, so currently, he insures his home only for fire damages. 

“Everything is hanging by a thread,” he said. 

Glazer chose to buy a residence in Felton because it was much cheaper than the homes he considered in the San Jose area, which is closer to his software engineering jobs. In recent years, Glazer said he’s thought about leaving the area because of the rising costs, but he won’t at this point. He loves his Felton community, the fresh air and the redwood trees. 

With rising insurance rates, Ann Thryft, 74, and her husband, John Mazetier, 73, are wondering if they can afford to stay in the Boulder Creek home they’ve lived in for the past 25 years. Both are retired and on Social Security. Thryft said she was “terrified” and “enraged” to see the proposed increases. 

Her annual FAIR Plan premium could go from $4,071 up to $6,012.87 based on the 47.7% average increase for her ZIP code. 

“Where am I supposed to get this money?” asked Thryft. “My income isn’t going up. How am I supposed to pay all of these increased expenses?”

In addition to her current FAIR Plan fee, Thryft pays $1,250 for her wraparound home insurance for other non-fire-related damages. 

As it is, Thryft said she and Mazetier already strictly budget and use coupons whenever possible. They cleared trees from around their home in recent years to reduce fire risk. They worked long careers — Thryft was a journalist and Mazetier worked at a hardware store — before retiring and applying for Social Security. They got a reverse mortgage to access extra cash to cover their growing expenses, like the FAIR Plan premium. 

“We did everything we were supposed to do … and we thought we were going to make it OK. And then fire insurance hassles happen,” she said. “We’re at the point now where it’s like — can we afford to keep living here?”

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