Wineries in Napa and others hard hit by massive fires in California’s wine country and elsewhere will soon be eligible for the state’s last-resort insurance plan, officials said Friday.
Hundreds of farmers, ranchers, grape growers and other outdoor businesses who were not previously eligible for coverage will be eligible starting February 1 under the California FAIR Plan, officially the California Fair Access to Insurance Requirements Plan.
Insurance Commissioner Ricardo Lara on Friday approved the new agricultural coverage, originally authorized under last year’s legislation backed by the California Farm Bureau, the California Association of Winegrape Growers and the Wine Institute.
This “will add much-needed protection to farmers and ranchers whose insurance policies have been canceled or not renewed,” said Agriculture Bureau Chairman Jamie Johansson. “Given the current wildfire challenges facing California, our farming community is fearful of what could happen this year without this additional coverage.”
The approval will allow plan administrators to finalize details needed to insure farm properties, a process that California FAIR plan president Anneliese Jivan expects to be completed by Feb. 1.
This will allow farmers who cannot obtain property insurance from other insurers to purchase basic fire insurance through the FAIR scheme. The plan is an insurance pool created by law in 1968 and funded by private insurance companies to cover people in wildfire-prone areas who otherwise cannot get coverage because the risk is too big.
To speed things up, Lara approved the plan but identified a few additional coverage issues which he said the plan needs to address in the coming months to ensure it “really takes all comers”.
Since 2018 alone, California has seen more than 32,700 wildfires that have destroyed more than 38,400 structures and burned more than 13,220 square miles (34,239 square kilometers).
Among the vulnerable areas are California’s more than 25 million acres (10 million hectares) of farmland.
The Glass Fire roared through the hills of Napa and Sonoma counties in the heart of Northern California’s wine country in 2020, and what started as a wind-fuelled rural fire in 2017 quickly razed entire residential blocks of houses in the town of Santa Rosa.
Glass and a second fire that burned in Napa County in 2020 caused more than $175 million in agriculture-related damage, including agricultural infrastructure losses exceeding $35 million, according to a legislative analysis .
Such risks can make agricultural businesses uninsurable through traditional coverage, which in turn has impacts even if properties survive, according to the agricultural bureau.
Without insurance, food companies cannot claim financial credit. And many farmers rely on large loans to pay for the plantings of the year’s crop, paying them back after harvest. They often use the farm itself as collateral.