Insurance Companies Are Getting Tougher When Insuring Homes in Wildfire Zones

New York --Homeowners looking for insurance in wildfire zones may face their own kind of inferno.

Increasingly, insurance companies across the nation are thinking twice before insuring homes that can fall prey to wildfires. Some are even deploying their own inspectors and offering their own services to ensure a home is protected from a fire.

Already some insurance companies are pulling out of areas that are very prone to wildfires, said Dan Bailey, director of the wildland fire program at the International Code Council. “The whole wildland fire issue is really getting on the radar screen of insurance companies,” he said.

The number of homes or structures destroyed because of a wildfire has been increasing at an alarming rate in recent years as more people build homes deeper into forests and brushes.

In the 1960’s, there was an annual average of 200 homes lost to fires. That's increased to roughly 2,300 a year, said Bailey. According to Bailey there are about 44,000 communities across the country that are designated as at risk to wildfires, accounting for just under 50 million homes, with that rate growing. Thousands of residents of Southern California on Monday were forced to evacuate their homes as wildfires rage out of control in the region.

An increasing rate of wildfires means homeowners will have to pay more to get insurance. If a home owner can’t access the private sector for insurance, they can tap “FAIR,” or Fair Access to Insurance Requirements, but that only covers fire insurance. The homeowner would still have to get the rest of the insurance from a private insurance company, which could make the policy more expensive.  Homeowners will also likely face tougher requirements for getting insurance. That could mean a fire retardant roof or having you house cleared of brush.

Bottom line: “You're going to pay more money in insurance,’’ said Jeanne Salvatore, senior vice president of public affairs at the Insurance Information Institute.

To mitigate the losses, insurance companies are more aggressively educating homeowners on how to protect their homes. Some are even acting as firemen, going to the site of the fire to prevent it from spreading.

Take American International Group (AIG). The New York insurance company created a wildfire protection program, which is designed to reduce the risk of a fire burning down your home. Geared toward clients with homes valued around $2 million, AIG will provide a consultation to see if the home is protected. Basically a wildfire team will go out to the home and do an exposure assessment to ensure brush and other fire-burning debris isn’t too close to the home. If necessary, the team will spray Phos-Chek, a long-term fire retardant, around the areas of the home that aren’t irrigated.   During a wildfire, the team will go out and spray any areas surrounding the home that could start a fire whether is bushes or a wood deck.

"We would rather prevent a loss if we can," said Stan Rivera, director of wildfire protection at AIG unit AIG Private Client Group. He thinks it will be harder for homeowners to get insurance in fire prone areas and that competitors will have to come up with unique ways to help reduce the risk.  “More insurance companies will become proactive,” said Rivera.

For homeowners, there are some simple steps that can be taken to reduce the chance of a fire.

Experts overwhelmingly say the most important step is to make sure there isn’t fire-burning brush too close to your home, and that means under your deck or in your gutters. That doesn’t mean you can’t have landscaping, but experts say to buy bushes and shrubs that are fire retardant, which is plentiful in parts of the country where wildfires often rage.

Another defense, although more pricey, is having a fire-retardant roof.  “The first thing any firefighter would say is get rid of your wood roof," said Candysse Miller, executive director of the Insurance Information Network of California. “It's an investment, but you’d rather spend $10,000 or $20,000 on a roof than buy a home.” 

Since fire isn’t always caused by blowing embers but the radiant heat, having strong windows could go a long way in preventing your house from burning down. Experts say to make sure the windows are doubled paned and to keep your curtains closed to repel the heat.

"Rule one is, don’t build in harm's way," said Harvey Ryland, president and CEO of the Institute For Business and Home Safety. “Rule two is, if you're going to build there anyway at least build a disaster-resistant structure."