CA Homeowner's Insurance Policy Canceled Because of Photo Taken From Space - Call Kurtis - CBS

Published Date: 10/08/2024

When “Big Data” Cancels Your Home: How Satellite Imagery Is Changing Insurance in California

Imagine checking your mail one morning to find a letter from your insurance company — not renewing your policy. No recent claims. No fire. No inspection visit. Just an abrupt notice that your coverage is gone.

Now imagine learning that the decision came not from a human inspector, but from a photo taken from space.

That’s exactly what happened to a California homeowner featured on CBS’s Call Kurtis segment — a case that shines a light on one of the most controversial trends in modern insurance: AI-assisted underwriting and satellite-based risk evaluation.

In a follow-up discussion on Insurance Hour, host Karl Susman unpacked the deeper story — explaining how new technologies are reshaping how insurers assess risk, why mistakes happen, and what regulators and consumers can do about it.

A Picture from Space, A Policy Canceled on Earth

The CBS report centered on a homeowner who received a non-renewal notice from their insurer. The stated reason: “excess vegetation” and fire risk visible on the property — supposedly identified via satellite imagery.

But when the homeowner looked around, the yard was clear, and vegetation was minimal. In other words, the insurer’s high-tech tools had made a low-accuracy call.

“We’re seeing more and more of these,” Susman noted. “Companies are relying on satellite and aerial imagery to assess fire risk — but the technology isn’t perfect, especially when it’s used without verification.”

This isn’t just a quirky mistake; it’s a symptom of a larger issue. As wildfire losses have escalated across California, insurers are under intense pressure to predict risk faster and more efficiently — often turning to automation and artificial intelligence to do so.

The result: convenience for carriers, confusion (and cancellation notices) for consumers.

Why Insurers Are Using Satellites

The shift toward AI and imagery-based underwriting didn’t happen by accident. It’s part of a larger move by insurers to manage skyrocketing wildfire exposure while cutting operational costs.

Traditional risk inspections involve human assessors visiting properties in person — a time-consuming and expensive process. Satellite and drone imagery, by contrast, offers:

• Instant visibility into roof condition, vegetation, and terrain.
• Cost savings through automation.
• Standardization of data across thousands of properties.

With AI-driven tools, insurers can analyze thousands of homes simultaneously — detecting tree overhang, brush proximity, and even roof discoloration.

“It’s not that insurers are trying to be unfair,” Susman explained. “They’re trying to use modern tools to measure risk in a faster, scalable way. The problem is when those tools replace human judgment instead of supplementing it.”

The Accuracy Problem

Satellite images can be powerful — but also misleading.

A few common issues Susman highlighted include:

• Seasonal variation: A photo taken in August might show dry vegetation that looks like overgrown brush — even if it’s well-managed the rest of the year.
• Resolution limits: Satellite images can’t always distinguish between a tree, a shadow, or a pile of mulch.
• Data lag: Many insurers rely on months-old imagery, so they may be acting on outdated information.
• Context blindness: AI can detect “risk elements” — but it can’t interpret context. A nearby shed might be on a neighbor’s lot, not yours.

In short: automation can flag possible issues, but it can’t see the whole picture.

“If you’re going to use technology to make life-and-death decisions for people’s financial security,” Susman warned, “you’d better make sure it’s accurate.”

The Role of Regulators

The California Department of Insurance (CDI) has already taken notice. Commissioner Ricardo Lara has repeatedly warned insurers that any use of AI or predictive modeling in underwriting must comply with existing laws on fairness, transparency, and accuracy.

That means:

• Insurers must disclose when technology like imagery or modeling is used in rate or renewal decisions.
• Consumers must have the right to challenge or correct errors.
• Decisions cannot rely solely on automated systems without human review.

These principles echo broader global discussions around “algorithmic accountability” — ensuring that automation enhances fairness rather than eroding it.

“It’s not just about technology,” Susman noted. “It’s about accountability. You can’t let a satellite photo be the final word on whether someone loses coverage.”

The Bigger Picture: A Market Under Strain

California’s insurance market is already under immense pressure.

With wildfire losses topping billions annually and insurers facing limits on how they can price risk under Proposition 103, many carriers have scaled back coverage or stopped writing new business entirely.

That’s forced hundreds of thousands of homeowners into the California FAIR Plan, the state’s last-resort insurer — a safety net now carrying record exposure.

In this environment, carriers are desperately searching for ways to manage risk without abandoning customers. AI and imagery tools seemed like an elegant solution. But as this case shows, speed without oversight creates new risks — reputational, regulatory, and ethical.

“The irony,” Susman said, “is that these systems were designed to make underwriting more precise — but when they make mistakes, they erode consumer trust and invite more regulation.”

What Homeowners Can Do If It Happens to You

So what should you do if you receive a cancellation notice based on aerial imagery or an unclear reason? Susman offered several practical steps:

1. Ask for Proof

Request a copy of the images or reports used in the insurer’s decision. Under California law, you have the right to know what data was relied upon.

2. Appeal or Provide Counter-Evidence

Take your own photos and submit them to your agent or insurer, showing your property’s current condition. Many companies will review appeals, especially when evidence is clear.

3. File a Complaint with the Department of Insurance

If your insurer refuses to review or provide evidence, you can contact the California Department of Insurance. They can investigate whether the company’s practices comply with state law.

4. Consult an Independent Broker

Independent agents like Susman work with multiple carriers and can often help homeowners find replacement coverage — or identify whether your current insurer made an error.

5. Document Everything

Keep copies of all correspondence, notices, and photos. If your cancellation results in a coverage gap or higher FAIR Plan premium, that documentation may be crucial later.

Balancing Technology with Humanity

Insurance technology (or “insurtech”) has enormous potential to make coverage more accessible and efficient. But, as Susman stressed, it must complement human expertise, not replace it.

“Technology is a tool, not a decision-maker,” he said. “You still need an experienced person to interpret the data, to understand context, and to talk to the homeowner.”

Used responsibly, imagery and AI can actually improve fairness — for example, by recognizing fire-hardening work (clearing brush, installing ember-resistant vents) that might not show up in old risk maps.

“The right use of tech could actually lower premiums for homeowners who’ve invested in mitigation,” Susman noted. “But only if it’s used accurately and transparently.”

The Irony of Prevention: Doing Everything Right, Still Getting Canceled

The CBS case is particularly frustrating because the homeowner had done everything right — maintained defensible space, managed vegetation, and complied with fire-safety guidelines.

Yet because of one flawed image, they were treated as if they hadn’t.

This disconnect highlights a core problem in today’s risk modeling environment: homeowners’ proactive efforts often go unrewarded.

That’s something the state’s upcoming Sustainable Insurance Strategy aims to fix. Under the reforms expected in 2025, insurers will be required to:

• Recognize and credit mitigation efforts (e.g., fire-resistant roofing, cleared vegetation).
• Use forward-looking models (catastrophe modeling) that reflect current conditions, not outdated averages.
• Disclose data sources and assumptions when making underwriting decisions.

These changes are intended to restore fairness — ensuring that a homeowner’s actual efforts matter more than an algorithm’s guesswork.

A Look Ahead: AI and the Future of Insurance Oversight

The “photo-from-space” story is a harbinger of the next frontier in insurance regulation. As insurers embrace automation, state and federal agencies are rushing to keep pace.

Expect to see:

• AI audit requirements: Insurers may have to prove their models are free from bias or error.
• Data transparency mandates: Homeowners could gain access to their full digital “risk profile.”
• Hybrid inspection models: A mix of human and machine review to validate results.

Ultimately, the industry’s credibility will depend on how well it balances efficiency with empathy.

“If technology makes life easier for the company but harder for the consumer,” Susman said, “then it’s not progress.”

Final Thoughts: Rebuilding Trust in a Digital Market

The image of a California homeowner losing coverage because of a satellite photo has struck a nerve — not because it’s unique, but because it feels symbolic.

It represents a moment where automation, climate risk, and regulation collide — with ordinary people caught in the middle.

Technology can make insurance smarter, faster, and more responsive. But it can also make it cold, distant, and opaque. The challenge for insurers, regulators, and advocates alike is to ensure that innovation doesn’t come at the expense of fairness.

As Susman put it:

“You can’t let data replace dialogue. At the end of the day, this business is still about people protecting people.”

For California homeowners, that means staying vigilant — understanding your rights, reviewing your policies, and demanding transparency when automation goes wrong.

Because while a satellite may see your roof, it doesn’t see your story.