For PG&E, having enough wildfire insurance wouldn't come cheap

PG&E Corp.’s $1.4 billion in wildfire insurance may not be enough to cover all its potential liabilities from the deadliest blaze in California history. But the company wasn’t necessarily skimping on coverage.

Level of coverage

That level of coverage is a “regular amount” for a utility of PG&E’s size, said Kit Konolige, a utilities analyst for Bloomberg Intelligence. But PG&E’s circumstances aren’t exactly regular.

California authorities are looking at the utility’s equipment as a possible cause of the deadly Camp Fire. If it’s found to be responsible, PG&E’s potential liability could reach $15 billion, according to Citigroup Inc. And don’t forget authorities are still investigating PG&E’s role in last year’s fires, putting the utility’s total potential wildfire liabilities above $30 billion.

“They should have had $10 billion — or $15 billion” in coverage, Konolige said.

Buying insurance is a balancing act

Buying insurance is a balancing act. Not having enough can be a catastrophe if the worst happens. But having too much coverage means you’re overpaying.

Part of the problem has also been that insurers see California utilities as increasingly risky bets as climate change makes wildfires more common. That’s led PG&E to tap a niche market to help expand its coverage.

Other California utilities including Edison International have said that there’s less insurance available and the cost is “significantly higher.”