An insurance company has canceled plans for homeowners in California because of the state’s new flood insurance law.
The insurer, CNA, said Thursday that it would no longer be offering flood insurance on homes in California, a move that comes after the California Public Utilities Commission on Wednesday said that it will not extend the same insurance coverage that was promised to homeowners for flood victims through the new flood-insurance program.
The state’s law takes effect Jan. 1 and requires that homeowners pay the highest rate for flood insurance to cover the cost of repairs and flood damage, including insurance premiums for homes damaged by major storms, according to the Insurance Institute for Northern California, which represents insurers.CNA said in a statement that its plan will continue to cover only homeowners with flood insurance who pay a maximum rate of $1,200 for flood damage.
The company, which is based in Los Angeles, said in the statement that the new insurance policy is a significant cost, and it will work with customers who wish to continue to pay the high rate for this policy.
It said that homeowners can get the full value of the policy for a minimum of $3,000.
The California Public Utility Commission on Tuesday said it will continue offering flood coverage for homeowners for at least the next two years, unless the state can extend the coverage.
The state will pay $5 million to the insurance company to cover its costs.
The PUC has said that the state will be able to extend the program beyond the current two-year period by the end of 2018, but it hasn’t yet released an estimate.