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Insurance vanishing for rural residents

By newadmin / Published on Friday, 02 Feb 2018 20:30 PM / No Comments / 11 views

If you live in the more rural areas of El Dorado County, your homeowners insurance premium has likely doubled in the last few years. Chances are you have been cancelled by one or more carriers and have had difficulty obtaining a new policy at any price.

If you haven’t experienced these adversities of the rural lifestyle, you likely will shortly. The cost and difficulty in obtaining homeowners insurance is now a leading cause of sale transaction delays. Obtaining homeowners insurance has become so difficult in some areas that buyers are notified early in the escrow process by their agent that they may not be able to obtain insurance at any price.

The homeowners insurance problem has become so severe that the state Department of Insurance recently released an investigative report showing insurance companies are refusing to renew policies and declining to offer new policies in areas that are susceptible to wildfires. Placer County had the state’s highest number of policy renewal denials and El Dorado County had the second highest.

California has about 14 million residential structures, including single-family dwellings, condominiums, residential complexes of two or more units and mobile homes. Most are within a few miles of a fire station and neighborhood fire hydrants.

It is the 3.6 million homes located in what is called the wildland-urban interface (WUI) where the insurance companies would prefer not to be doing business. These homes have been classified as located in areas having the greatest risk of wildfires and the greatest risk of loss to the insurance companies.

In El Dorado County we have a total of 84,500 dwelling units with 47,715 identified as being at high or very high risk of wildfires, making us the 10th highest-risk county in the state with 56 percent of our housing stock at risk of fire and at risk of a policy cancellation.

Insurance carriers reducing exposure to future insurance claims is understandable. California wildfires have set new records. The 2015 Lake County and Butte fires destroyed 3,000 structures and 1,700 homes. The Napa fires damaged or destroyed 14,700 homes equaling $9 billion in insured claims and the recent Thomas Fire in Santa Barbara County destroyed 1,000 homes.

The total number of homes destroyed each year by all fires by all sources is about 25,000. That’s tragic but it’s only one of every 700 insured homes. Insurance companies had a much higher percentage of claims in Texas when Hurricane Harvey damaged 203,000 homes or when Katrina damaged or destroyed 300,000 in New Orleans. Beachfront homes located in hurricane alley are likely at greater risk of an insurance claim than most homes located in WUI areas.

The location of these homes cannot be changed but many homeowners and communities located in a WUI area have taken precautions that have reduced the risk of damage in the event of a wildfire. However vigilant, their property is lumped with all other homes into the high risk WUI category determined by computer models and ZIP codes.

A stucco house with a tile roof, cement patio and 300 feet of defensible space is placed in the same high-risk category as a wood-frame home with wood shingle roof, wood deck and no clearance. That’s an unfair financial burden to the conscientious homeowners who clear their land and use non-combustion building materials.

When did availability and cost of insurance become totally based on a computer’s placement of a home on a map? Insurance premiums are supposed to be primarily based on individual circumstances.

A life insurance policy for an overweight skydiver with a heart condition in his 80s would normally have a higher premium than a healthy 30-something office worker. Auto insurance is calculated on driving records and number of miles driven.

The same individual risk assessment applies to all other insurance products except for homes located in a WUI. That’s not fair. It would be like cancelling my auto insurance because my neighbors have speeding tickets. Why should communities that have active fire safe councils and folks who clear defensible space be lumped into a high-risk category of non-compliant communities and properties?

Insurance companies should recognize that all WUI communities and individual properties are not alike. The gated community of Auburn Lake Trails in Cool with its paved streets, fire hydrants, a nearby fire station and an active fire safe council should not be included on the same WUI map as Volcanoville, located on the Eldorado National Forest.

Homes with cleared, defensible space, built with non-combustion materials that pass an annual fire inspection should not have their policies cancelled simply because they appear on a map. Rather than cancelling policies, insurance companies need to work with homeowners who live in WUI areas and provide discounts and credits for meeting fire safety compliance levels — a “good homeowner” discount.

Until the state and federal governments get serious about forest management we will continue to have wildfires and the loss of homes built nears forests.

However, there are precautionary measures that many homeowners have employed to minimize their loss in the event of wildfire. When homeowners take these fire-safe measures, they should not be penalized by a policy cancellation and higher premiums.

The state approves insurance carriers, their policy coverage and premiums charged. The Department of Insurance or the Legislature needs to address the unfairness of inclusionary mapping that doesn’t take into account individual homeowner effort before insurance vanishes completely for homes in the woods.

Ken Calhoon is a real estate broker in El Dorado County. He can be reached for questions and comments at

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