It’s not just homeowners struggling under the weight of the insurance crisis. Local businesses are feeling it too

In 2019, Bryce Skolfield and his partner purchased a converted turn-of-the-century ranch house in Guerneville and opened the Mine + Farm Inn. Moving to a new place and starting in a new industry, “we had worries and fears,” Skolfield said. But, “insurance was not on our mind. … It turned out to be our biggest challenge.”

Initially, securing insurance wasn’t an issue, but each year, the inn’s policy is dropped instead of renewed, even with no history of claims. And, every time, the couple is forced back into a market with fewer options, less coverage and higher prices.

In the past four years, Skolfield said the business’s insurance costs have risen more than 200%. The expense eats up more than 10% of the inn’s gross receipts, more than double what would be typical. Skolfield has had to pull back on updates and expansions on the property, adjust room rates and look at staffing.

“We haven’t even been able to pay ourselves as owners because everything is having to go back into the business just to cover these exorbitant increases in costs,” Skolfield said.

As California’s insurance crisis intensifies, much of the focus has been on homeowners, but local businesses are feeling the effects as well. Major insurers, from Allstate to Farmers to USAA, are limiting coverage or pulling out of the state altogether because of climate change-driven fire risk. As a result, some businesses have seen costs for all types of required policies soar as the insurance market becomes less competitive. As businesses are forced to make tough choices under the weight of skyrocketing costs, the consequences ripple outward for workers and consumers, too.

“I’m not sure a lot of the small independent businesses are going to be able to make it another year like this,” Skolfield said. “This could be really bad for the local economy in so many ways.”

Joe Bartolomei, who owns the Farmhouse Inn in Forestville, said that in his role on the board of the Sonoma County Hospitality Association, rising insurance costs have become “all we hear about.”

“It’s a lot for the small businesses to bear,” he said. “Even in the good times, the margins aren’t that great.”

Already, the local tourism and hospitality industry on which the region heavily depends has had to weather biblical-level setbacks in the form of devastating wildfires, winter storms and the COVID-19 pandemic. Some worry that while bigger corporate outfits might be able to manage, many smaller operators that embody the area’s charm and character could be driven out.

“The smaller mom-and-pops providing a really intimate, unique, authentic experience,” Bartolomei said, “they’re the ones getting squeezed the most.”

Personally, Bartolomei said he’s seen his general liability insurance for the Farmhouse Inn property go from a ballpark of $70,000 per year to almost $400,000. Unable to secure a policy from big name insurers, Bartolomei had to turn to the mostly unregulated secondary market where costs soar for less-desirable coverage.

“It’s incredibly frustrating, it’s stressful, it’s expensive,” he said, “and it doesn’t feel like it’s getting any better. It feels like every year, it’s just getting worse.”

With coverage increasingly precarious, Bartolomei said he would think twice before filing any sort of claim, something he’s only done once in 23 years of business — during the area’s 2019 floods. “If I make any claim, I’ll probably get canceled immediately, so you don’t even want to touch it,“ he said. “It doesn’t feel very good to be paying for something that you’re never going to use. You basically only have it in the event that there’s a catastrophic event that completely levels your property, and then you hope you have enough to rebuild.”

In its 12 years in business, the Glen Ellen Star, a popular neighborhood restaurant in Sonoma Valley, has overcome some hurdles — a few rounds of fires in the region followed by a pandemic. But, it is insurance costs that chef owner Ari Weiswasser has had to contend with most recently. After being quoted a threefold price increase for general liability and umbrella insurance for lesser coverage, he decided to forgo the latter, hoping the general liability will be enough if something does happen.

“Do we really want to three-x our insurance for less?” Weiswasser said. “So, we’re kind of gambling a little bit here.”

It’s frustrating because as insurance costs steadily creep up, the inevitable result is raising menu prices — “you can only absorb so much,” Weiswasser said — but “then, at the end of the year, you look at the (profit and loss), and you’re not making more. You’re paying out more money.”