Terry McAteer: Redlining alive and well in Nevada County
Redlining, the practice of drawing lines on a map to exclude certain groups from benefits, is the most important problem facing Nevada County residents.
In 1974, the Equal Credit Opportunity Act (a broadening of the Fair Housing Act of the 1960s) was enacted because banks were deliberately not lending in minority communities, keeping these communities in ghetto status because banks did not want to expose themselves to these risky areas. The same practice is underway in Nevada County from another industry — insurance.
Insurance companies have redlined Nevada County homeowners because we are too risky due to the possibility of wildfires and this blatant and coordinated practice throughout the insurance industry is threatening the economic viability of our community.
This past week, I received a phone call from Libby, an agent with my local insurance company, informing me that my homeowners fire insurance coverage was being discontinued. I have been with this firm for 34 years and never have instituted a claim. While Libby was very pleasant, she informed me that the firm was instructed by the headquarters to drop all insurance in the 95959, 95945 and 95949 zip code areas. She had a list “a mile long” of people to contact. This, my friends, is redlining, plain and simple.
Banks in the 1960s also used zip codes to deny minorities home loans even though the individual met the loan qualifications. Now, insurance companies are using the same tactic, whether or not the homeowner has completed clearing of the property to insure that it is fire safe and reduce the risk.
The problem for Nevada County is real. What will happen to real estate sales when a prospective buyer is not able to gain insurance? What will happen to home values when sales begin to fall through? The same problem existed up to the 1970s which insured that poor and depressed neighborhoods stayed that way. Are we headed in that direction?
The stories of this redlining practice abound these days. Friends who live near the Nevada County airport had their insurance company of 17 years call to inform them that their homeowners insurance had been canceled. They were told that a fire study map had been developed which “outlined” the areas of highest wildfire risk. The insurance agent told them that their home on the map was in that area and, therefore, they were being dropped.
They eventually found a high-risk carrier which charged them $16,000 annually for homeowners insurance — a four-fold increase in cost!
Another friend whose insurance was dropped spent three days shopping online and spoke to scores of insurance company agents who, while sympathetic, referred to the “map” which precluded them from even offering an insurance policy. Sounds like the same rhetoric used in the 1960s and ’70s by banks to deny home loans to minority communities!
What we are experiencing is a new form of redlining activity, not by banks but by insurance companies, that creates another form of discrimination based on risk. Banks did the same type of redlining prior to the 1974 act and were very open and forthcoming about it. The law eventually caught up and the practices were declared illegal. Nevada County and other foothill communities are the new test cases for redlining.
Thankfully Gov. Newsom is aware of the problem. His late father’s home located in the Placer County community of Dutch Flat met the same insurance fate that many in Nevada County have recently faced. He has committed to seeking legislation and other means to help solve the problem.
In the meantime, continuing working to make your house fire safe, because who knows if there’ll be insurance to cover the losses.
Terry McAteer is a member of The Union Editorial Board. His views are his own and do not represent the views of The Union or its editorial board members. Contact him at firstname.lastname@example.org.
Support Local Journalism
Support Local Journalism
Your donation will help us continue to cover COVID-19 and our other vital local news.
If you don't follow the rules, your comment may be deleted.
User Legend: Moderator Trusted User
The many contributors who have expressed their significant concerns about the Rise Gold proposal deserve our thanks. Perhaps it’s time for a bit of summary of a few salient points. Taken together, their arguments present…