And that is something new that came out called the California Fair Plan. And it isn’t very fair. It isn’t very good. The Fair Plan was originally designed as a safety net, a last resort insurance program for homeowners who could not obtain fire coverage through normal private insurance markets. But today, it’s becoming something much bigger. It is increasingly becoming the insurer of necessity or last resort for large parts of California. And that shift says something very important about the growing financial risks tied to climate disasters. Right? Is it really a climate disaster? Been a firefighter for 26 years.

People tend to not maintain their homes. They leave debris all around it, bushes all around it. They leave their windows open, houses burn down. That is the truth. People freak out and they say the lasers from space are burning down specific houses when the rich houses aren’t burning down. Yeah, it’s because they have a green lush lawn around them and nothing up against their house. But this is getting big. It’s going to cost a lot of people their homes. And it’s going to the California real estate market will continue to crater because escrows are being canceled.

Look, for decades, private insurance companies willing to willing cover, you know, they covered homes throughout California. Right. But after years of catastrophic wildfires, billions of dollars in claims, inflation and construction costs after covid and the rising re insurance expenses, many insurers in the state of California began pulling back. And if you go, hey, I don’t live in California, it doesn’t affect me. California is the largest economy in the country and one of the largest in the world. So when they start cracking, the rest of the nation is going to feel it as well. There will be reverberations or shock waves going through the nation.

You see, some companies, insurance companies stopped writing new policies altogether. Others reduced their coverages. Some left entire zip codes altogether. See, the problem here is incredibly simple. Insurance companies only survive if premiums collected are greater than the long term losses that are paid out. Right. Insurance companies are in the business to make money. And in parts of California, wildfire risk became so extreme that insurers no longer believe that the math worked. And that is where the fair plan enters the story here. Now, check this out. The California fair plan is not technically run by taxpayers directly.

Instead, it is backed by a pool of private insurance companies operating inside of the states. And it comes with a cost. If homeowners cannot find traditional fire insurance, they can apply for fair plan coverage as a last resort. But here is the big deal. There’s a catch. You see, there’s actually several catches and this is where it’s going to get sticky, cost people money and everything’s going to eventually implode. The fair plan often costs significantly more than standard insurance while providing less coverage. OK. So you’ve not only got costs going up, you’ve got coverage going less, which means the prices exponentially went up.

Many homeowners discover that fair plan, the policies are more limited and may not include everything a traditional homeowner insurance policy would normally cover. In many cases, homeowners must combine the fair plan with supplemental policies to fully protect their homes. And that means higher costs. And real quick, if you don’t mind me jumping in, I’m running a sale for all business owners across the nation. As a matter of fact, anywhere in the world, this will work. It’s called the business profit accelerator. I’m going to throw us 50 percent off sale link down below. If within 30 days you’re a business owner, you take the course, you go ninja.

I didn’t see my my profit explode. No joke. In 30 days of taking this course, e-mails will give you your money back. That’s how serious I am. Any business owner around the world, check it out. OK, so now back to California in this insurance fiasco because of fires, everything’s burning. Many for many Californians, insurance costs are already exploding. They’re exploding before this came about. Some families are seeing annual premiums double or triple compared to what they paid for only a few years ago. And for me in Nevada, I was actually an escrow on a property that I couldn’t get insured.

And so we ended up backing out. And so the people cannot like three people have been an escrow on this property. They keep having to lower their price. Nobody can get insurance on it. So this isn’t just affecting California, but California is sort of its own interesting animal, right? Because this whole situation creates a serious financial problem because rising insurance costs directly affect housing affordability. A homeowner may technically afford be able to afford the mortgage, right? The principal and the interest, the taxes. But if you can’t get insurance or you can’t afford the insurance, it’s worthless.

Condo complexes in California and in Nevada, I’m seeing the insurance is exploding because of wildfire risk. And insurers do not want they have an easier time ensuring one house on one street. And then maybe they’ll ensure a house two streets down and three streets down to that because they’re they’re putting out there dividing their geographical risk. But with condo complexes, that’s a whole nother thing. I went into one condo complex. They can’t sell any condos. The prices have already collapsed 30 percent in this development. And I went and talked to one of the listing agents and they said the best they could do this condo complex, excuse me, is made up of about, let’s say, eight primary buildings.

Each building houses about 10 condominiums in it. Each of those complexes, the eight large buildings have a different insurance company. That is right. One insurance company will not ensure the entire thing. So that raises the prices, too, because the insurance companies are like, we’re afraid if this one building burns down, we’re going to have a hard enough time rebuilding it because of the cost of rebuilding. You see? So if the insurance cost becomes too expensive or unavailable, home values themselves can eventually come under pressure. All right. Think about it another way. Would you buy a one million dollar home in a wildfire zone if the insurance costs fifteen thousand dollars a year or if you’re not even guaranteed for coverage at all? Now, I get it.

There’s going to be people in the bottom and go, hey, lucky for you, I can’t afford a million dollar home. Get out of your own mind. It’s not all about you. Can you guys all just type? Yes, if you agree with with my my thought there. You get it. So this is the deal. This is why especially million dollar homes are dropping in price faster than the cheaper homes because a lot of people just don’t think about it. They’re buying the lower priced homes. They just don’t pay attention. And the question is becoming very real in parts of California.

The the effects spread far beyond the homeowners alone. This affects investors. Mortgage lenders usually require insurance. Right. So if you can’t get it or you can’t afford it without coverage, buyers may not be able to qualify for loans. Real estate transactions can collapse. Developers may avoid high risk areas when building up properties. Property demand all of a sudden starts to weaken. And over time, this can reshape the entire community or communities all around not only the city of California, but around the nation. You know, it’s not just California that has fires. Montana, Wyoming, you’re like, yeah, ninja, but there’s not a lot of houses there.

What about Washington and Oregon? What about Nevada? There is so many places in America that actually have fires that they’re going to be affected. And if it’s not fires, it’s the Florida hurricanes. It’s the floods in Louisiana. There’s stuff happening everywhere. And we are in the greatest insurance crisis, I want to say, in the history of our country. So this is an exciting time to be sitting back on the sidelines unless you own a business. If you own a business, you need to start figuring out how to find more customers, charge more higher prices.

I know that sounds crazy. But then you’ve also got how to get more referrals and blow your business up while everyone’s is collapsing. I’m going to throw a link down below to the profit accelerator course. This will change everything. And if it doesn’t in 30 days, let me know. I’ll give you your money back. That is how serious I am about this. All right. That being said, the economic ninja is out. [tr:trw].

See more of The Economic Ninja on their Public Channel and the MPN The Economic Ninja channel.