Protecting Your Home from Threat of Wildfire

Protecting Your Home from Threat of Wildfire

The devastating wildfires of the last few years have resulted in insurers becoming more selective about the properties they are willing to cover. This intense spate of yearly wildfires has led to a record $12.8 billion in insurance claims. Some insurers have started non-renewing in these high-risk areas and others have just stopped writing new policies altogether in California.

Homeowners that receive a notification that their insurer plans to non-renew their policies are faced with shopping in a market that is more selective, and with insurers requiring that they take certain steps to better safeguard their properties. The issue is even more acute for owners of high-end homes as there are only a handful of insurers that will underwrite them in the first place. If you have a custom home in a wildfire risk area that has been struck by wildfires in the past or is in a high-risk area, the marketplace can be difficult.

What’s going on

The practice of non-renewing policies has been growing. And the remaining insurers are applying three metrics in evaluating exposure:

  1. Brush mapping – This is a map of the tinder and brush, nearby trees and other natural items that could contribute to your home catching fire. The insurer will use the mapping to see if you are keeping up your property by removing combustible materials from the perimeter and limiting the amount of shrubbery and trees.
  2. The nearby wildland-urban interface – The closer that your home is to wildlands (open spaces with combustible materials), the more likely it is that insurers will non-renew. A wildland-urban interface is defined by the Forest Services as a place where “humans and their development meet or intermix with wildland fuel.” Communities that are within a half a mile of the zone are included.
  3. Concentration of other homes an insurer covers in your area – If your insurance company already writes policies for many other homeowners in your area and they feel they have too much risk concentrated in that zone, they may opt to nonrenew policies to reduce their exposure. While we can sometimes work with an insurer to have the homeowner clear brush and take measures that would reduce the chances of their home catching fire to satisfy the brush-mapping metric, it’s more difficult to negotiate about numbers two and three.

The options

If you have a home in a wildfire area and your insurer plans not to renew your coverage, and if other companies are not willing to underwrite your policy, we can help you find new coverage. If no admitted insurers (those that are licensed and regulated in California) are willing to cover your home, we have two options:

The non-admitted market – These insurers are not licensed to do business in California, but we can still use them to write policies for high-end homes. These carriers, which include Lloyd’s of London, Marketplace, XL Catlin and Scottsdale, are usually willing to write homes, but they too have increased their underwriting criteria.

The California FAIR Plan – The FAIR plan is the state-run market of last resort for homeowners that cannot get coverage in the regular market. There are two problems for owners of high-end homes:

  • The maximum limit for coverage is $1.5 million
  • Coverage is limited to only damage from fire or lightning, or other types of sudden damage like windstorms. The policy will not cover other claims that a typical homeowner’s plan would cover like, water damage, theft and liability

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