Keeping your home insured in a fire zone
Though many companies have dropped home coverage in the state, it's still obtainable -- you just have to make your home fire-safe, do a lot of legwork and pay high premiums.
By Diane Wedner→
October 26, 2008
It's the peak of what is now a year-round fire season. And throughout Southern California, homeowners in blaze-prone regions are having a hard time finding fire insurance. Tens of thousands of homes are in the region's brushy canyons, with still more under construction. The powerful blazes of the last few years have raised questions about whether people should be encouraged to live in such areas -- and insurance companies have begun to fight back, dropping some customers and raising prices for others. "The market is frightening, for sure," said Paul Cashman, a State Farm Insurance agent. "Some companies aren't writing any policies, some are not renewing in selected areas, and some will offer policies only on a place-by-place basis." Still, it is possible to insure most properties -- if you are willing to do a lot of legwork and pay high premiums.
There are 200 companies insuring homes against fire in California, and even owners in high-risk zones can generally find a policy, said California Insurance Commissioner Steve Poizner.
Step by step
Here's how to get started.
First, make your property fire-safe. That first step may determine whether you get a policy and how much you'll pay for it.
Clear 300 feet of combustible brush or chaparral surrounding the house (the state requires 100 feet), install roof sprinklers and enclose the eaves. Make sure your landscaping does not include combustible plants like juniper or lavender near the house.
Additional information on fireproofing can be found at Cal Fire's website,
www.fire.ca.gov.
Next, search for an appropriate insurance company. Using either a broker or an agent, find out the various firms' underwriting policies and prices. You might have to deal with companies that are unfamiliar to you, as some well-known firms have slowed or stopped their fire insurance business in the region. Allstate Corp., for example, stopped selling new homeowner policies in California last year. State Farm Insurance Cos. has become selective about where it offers insurance, said spokesman Bill Sirola.
Insurers may factor in the age of a home, the construction materials and the home's proximity to a fire hydrant and fire station. Owners who go the extra mile sometimes can get discounts from insurers; those who don't comply with carriers' requirements often pay more.
Homeowners in high-risk zones unable to get policies from large national carriers may qualify for a so-called surplus line from companies that are not overseen by the state. Those policies typically are arranged through insurance brokers, said Shelina Martinez, a vice president at CDS Insurance Services in San Dimas.
Corral Canyon owners Paul and Danielle Morra went that route.
Their home was newly built in a high-risk fire zone, and the couple knew they would have difficulty finding a policy.
To make the property more attractive to insurance companies, the Morras exceeded local, state and insurance company requirements by clearing 350 feet of combustible brush around their Malibu property. They installed an indoor sprinkler system (mandatory in unincorporated Malibu) and $3,000 roof sprinklers (not required). They also coated all of the building materials for the home with a fire retardant.
The couple got a policy from Lexington Insurance Co., a subsidiary of American International Group Inc., through their insurance broker, but at the hefty price of $9,600 a year.
Soon after, the Corral Canyon fire raged through the neighborhood, and the Morras were evacuated.
A company inspector checked out the property before and several times after the blaze, which the house survived unscathed, even though many neighboring homes were burned.
"Firefighters said our brush clearance made the difference," Paul Morra said. Their policy recently was renewed.
Extra cautious
Some companies may require, beyond the usual safety measures, interior sprinklers, including in closets; fire-resistant roofing materials; on-site 30,000-gallon water tanks; and access codes for homes in gated communities.
And if you are in the fire zone, be prepared to pay high premiums.
"Even if you do all of the mitigating in high-risk zones, you still will pay more in many cases," said Josh Stichter, a sales representative in Santa Barbara for Hub International, an insurance brokerage.
Some owners facing nonrenewal notices have used the power of persuasion to keep their policies. Santa Barbara resident Ginger Sledge, a film producer, received a letter from her insurance company after last summer's Gap fire, informing her that an inspector would be arriving to evaluate her Mission Canyon property, which was not affected by the blaze.
A self-described poster child for maintaining a fire-safe property, she was surprised when shortly after the inspection her nonrenewal notice arrived in the mail, after 20 years with her carrier. The letter claimed that her home's proximity to Los Padres National Forest, not issues with the property itself, prompted the rejection.
After two days of chasing insurance-company leads from a real estate agent and friends, Sledge found two companies willing to cover her home. She contacted her insurer with that news and got copies of the photos her company's inspector took, which depicted the house closer to the wilderness than it actually is, she said. She ended up being reinstated, after the company checked a satellite map -- a frequently used insurer's tool -- and determined that the house was indeed a safe distance from the forest.
A last resort
Sometimes it's impossible to get insurance from any company.
If that's the case, you can purchase a last-resort policy under the California Fair Plan, a government- and insurance-industry-sponsored alternative that offers property insurance to those deemed too risky by other companies.
The plan covers the structure and its contents, but it can be expensive; experts say the surcharge can run as much as 150% higher than regular coverage if 200-foot brush-clearance and other requirements aren't met. The average policy costs about $800 per year, said Fair Plan spokesman Mike Harris. About 2,400 of the state's current 19,000 Fair Plan brush-wildfire policyholders are paying surcharges.
The bare-bones plan does not provide theft, liability and other protection, so experts recommend that you buy an additional "wraparound" policy from an insurance company to fill in the gaps in the coverage. The cost varies by company.
Once you get a policy, it's important, experts say, to carry enough insurance to rebuild the house, replace the contents of your home at their current value and cover living expenses during construction.
Standard policies today reimburse homeowners for the replacement cost rather than the depreciated value of the furniture and other items in the home. It's prudent to hire a professional appraiser to assess the cost of covering a home's contents, said State Farm spokesman Sirola, and then have the appraiser return periodically to make sure the coverage is keeping pace with the rising cost of home construction in the vicinity.
Owners should keep an inventory of the contents of their homes by video-recording all items stored in the house. Keep the inventory in a safe deposit box. Owners must notify their insurance companies about new construction and high-end acquisitions, such as a big-screen TV. And if the nonrenewal notice comes, act fast.
"After one expires, it's twice as hard to get a new one," said broker Martinez.
Sledge's neighbors in Santa Barbara, Jim and Laura Herrell, received a notice from Farmers Insurance Group shortly after the 2007 Zaca fire, informing them that their insurance policy would not be renewed. Jim Herrell said he snapped into action.
An insurance broker provided him with several quotes that were contingent on on-site inspections. Herrell, meanwhile, asked his auto-insurance agent for a homeowners policy estimate, and AAA sent an appraiser to the property.
"He photographed every inch of the interior, exterior, measured the brush clearance, measured the distance of our house from the road, and we discussed the fire break provided by the avocado orchard across the ridge from me," Herrell said. "We got a policy from them, and it was less expensive than our previous one."
Wedner is a Times staff writer.
