Sign In or Create an Account.

By continuing, you agree to the Terms of Service and acknowledge our Privacy Policy

Culture

Climate Change Comes for ‘Selling Sunset’

Yes, $200,000 fire insurance premiums are possible in Los Angeles now.

Selling Sunset.
Heatmap Illustration/Getty Images, Netflix

Most of the time, the hot, wealthy, coutured-up real estate agents on the hit Netflix series Selling Sunset make selling luxury homes in the Los Angeles hills look like a breeze. The only adversity the Oppenheim Group girls seem to face is inter-office drama over perceived slights, blown out of proportion by savage gossip and likely invented for the cameras.

But in the new season that premiered last week, one of the agents pulled back the veil, just for a moment, on a problem that’s starting to give their high net worth buyers pause: fire insurance.

In the first episode, agent Emma Hernan throws an open house for brokers at a palatial, $19 million home in Beverly Hills. The modern, 5-bed, 9-bath, has “unobstructed jetliner views from every room,” a “fingerprint-secured Mezcal/Wine tasting room,” an infinity pool, a Himalayan salt sauna, a Japanese soaking tub, a wet steam room, a poolside cabana, a 20-person theater with a bar, and a tacky-as-hell human-sized chess set.

Modern concrete mansion built into a hill with a pool in Beverly HillsEmma Hernan's listing, 9406 Lloydcrest Dr. in Beverly HillsScreenshot/Netflix

But the house, with its opulent amenities and epic vistas, is tucked into a private hillside surrounded by trees. “When you buy a property in this area, the fire insurance and things along those lines can be pricey,” Hernan tells a group of agents gathered on the balcony.

It turns out, Hernan is throwing the event because the original buyer she lined up fell out of escrow after finding out the fire insurance on the house was going to cost an eye-popping $200,000 per year, minimum.

As she tells the other agents the number “isn’t that crazy for a house in the Hills,” they nod knowingly. “But they expected it to be like $40,000, which isn’t going to happen.”

Real estate agent Emma Hernan explains to the audience that the lowest fire insurance they could find was $200,000 per year.Screenshot/Netflix

It’s a wild example of what’s going on in the California insurance market right now, where many homeowners are seeing their rates skyrocket, if not getting dropped from their plans altogether, while others can’t find anyone willing to sell them a policy to begin with — no matter how much they are willing to spend.

“There's some people that cannot get it,” Shelton Wilder, a luxury real estate agent in Los Angeles, told me. “And they checked everywhere and so they just don't have insurance on their home.”

This is a pretty recent phenomenon. A 2021 report by the University of California, Berkeley, Center for Community Innovation traces how fire insurance payouts rose dramatically in the last decade due to continued development in high-risk areas and climate change driving more severe burns. It notes that in the latter half of last century, the industry paid an average of $100 million per year in fire insurance claims in the state. But between 2011 and 2018, that number exploded to an average of $4 billion per year. During the particularly bad wildfire seasons of 2017 and 2018, companies paid out two times in incurred losses what they made in earned premiums.

The following year, there was a 31 percent jump in policy non-renewals statewide, mainly in areas with high wildfire risk, according to the California Department of Insurance. Insurers began retreating from some parts of the state altogether. Last week, State Farm, the largest provider of home insurance policies in the country, put a freeze on new applications in the entire state of California.

“It used to be a negligible part of the home purchase process,” another L.A. real estate agent, Brock Harris, told me. “You would just call State Farm and get a policy and whatever, they all kind of cost the same. In a lot of areas it’s suddenly a big part of the analysis of whether the home is affordable. It's kind of crazy.”

Brock’s wife and partner, Lori Harris, had a similar experience to Hernan, the Netflix star. Her client put an offer on a house in Mandeville Canyon, a ritzy hillside neighborhood where Gweneth Paltrow, Dr. Dre, and Lachlan Murdoch have all bought homes. But then she found out the fire insurance was going to be $100,000. “Obviously it was a huge deterrent,” said Harris. “It spooked her. We have clients who won’t look at Mandeville because of the history of evacuations. There’s only one road down so they get freaked out by it.”

It’s not just higher fire risk that’s driving up premiums. Supply chain issues, labor shortages, and inflation are all making the rebuild process a lot more costly.

Many Golden State residents who can’t find insurance on the market are eligible for coverage through a state-mandated program called the California FAIR Plan, but the premiums are on average much higher. The average market insurance in Los Angeles goes for about $1,500 per year, but the FAIR Plan costs an average of $3,200. (FAIR Plan policies only cover up to $3 million.)

Last year, in an attempt to increase access to coverage, the California Department of Insurance issued first-in-the-nation rules requiring insurers to give discounts to property owners that reduce their wildfire risk, like installing a fire-resistant roof or clearing debris around the structure.

As for the house in Beverly Hills? One year later, it’s still on the market. But it got a $6 million price cut — or the equivalent of those fire insurance payments over the course of a 30-year mortgage.

You’re out of free articles.

Subscribe today to experience Heatmap’s expert analysis 
of climate change, clean energy, and sustainability.
To continue reading
Create a free account or sign in to unlock more free articles.
or
Please enter an email address
By continuing, you agree to the Terms of Service and acknowledge our Privacy Policy
Carbon capture and pollution.
Heatmap Illustration/Getty Images

When Trump enters the Oval Office again in January, there are some climate change-related programs he could roll back or revise immediately, some that could take years to dismantle, and some that may well be beyond his reach. And then there’s carbon capture and storage.

For all the new regulations and funding the Biden administration issued to reduce emissions and advance the clean energy economy over the past four years, it did little to update the regulatory environment for carbon capture and storage. The Treasury Department never clarified how the changes to the 45Q tax credit for carbon capture under the Inflation Reduction Act affect eligibility. The Department of Transportation has not published its proposal for new safety rules for pipelines that transport carbon dioxide. And the Environmental Protection Agency has yet to determine whether it will give Texas permission to regulate its own carbon dioxide storage wells, a scenario that some of the state’s own representatives advise against.

Keep reading...Show less
Blue
Economy

Trump’s Tariff Threats Will Soon Be Tested

What he wants them to do is one thing. What they’ll actually do is far less certain.

Donald Trump.
Heatmap Illustration/Getty Images

Donald Trump believes that tariffs have almost magical power to bring prosperity; as he said last month, “To me, the world’s most beautiful word in the dictionary is tariffs. It’s my favorite word.” In case anyone doubted his sincerity, before Thanksgiving he announced his intention to impose 25% tariffs on everything coming from Canada and Mexico, and an additional 10% tariff on all Chinese goods.

This is just the beginning. If the trade war he launched in his first term was haphazard and accomplished very little except costing Americans money, in his second term he plans to go much further. And the effects of these on clean energy and climate change will be anything but straightforward.

Keep reading...Show less
Blue
Electric Vehicles

The New Electric Cars Are Boring, and That’s Okay

Give the people what they want — big, family-friendly EVs.

Boredom and EVs.
Heatmap Illustration/Getty Images, Apple

The star of this year’s Los Angeles Auto Show was the Hyundai Ioniq 9, a rounded-off colossus of an EV that puts Hyundai’s signature EV styling on a three-row SUV cavernous enough to carry seven.

I was reminded of two years ago, when Hyundai stole the L.A. show with a different EV: The reveal of Ioniq 6, its “streamliner” aerodynamic sedan that looked like nothing else on the market. By comparison, Ioniq 9 is a little more banal. It’s a crucial vehicle that will occupy the large end of Hyundai's excellent and growing lineup of electric cars, and one that may sell in impressive numbers to large families that want to go electric. Even with all the sleek touches, though, it’s not quite interesting. But it is big, and at this moment in electric vehicles, big is what’s in.

Keep reading...Show less
Green