A small insurance company has collapsed due to overwhelming claims tied to the devastating Camp Fire in Northern California.
The state of California will take over the policies of Merced Property & Casualty Co., which was unable to pay the claims in the destroyed city of Paradise and other affected areas. The 112-year old company told a Merced County judge it had $23 million in assets but was facing $64 million in claims, mostly in Paradise.
On Monday, the judge gave state insurance commissioner Dave Jones the authority to liquidate the insurer’s assets to begin paying claims. The association will cover property insurance claims for up to $500,000. (Zillow puts the median cost of a home in the city at just over $257,000.)
About 14,000 homes were leveled by the Camp Fire and it’s unclear how many of those were covered by Merced. The company, though, seemingly focused on the small area around Paradise, which other insurers had pulled out of due to the area’s high fire risk.
This is the first time the state has taken over a private insurer. Total costs of the Camp Fire, which occurred just north of Sacramento, and the Woolsey Fire in suburban Los Angeles are expected to top $19 billion.
The Camp Fire, the most destructive blaze in California’s history, burned from Nov. 8 to Dec. 2, claiming at least 85 lives and ravaging some 153,336 acres.
In the fire’s aftermath, several communities have come together to help rebuild affected areas, while PG&E, whose power lines are suspected of starting the fire (though state fire inspectors have not stated an official cause) is working to restore power. The utility is already facing legal action for its expected role in the fire.