Insuring homes in wooded areas increasingly difficult
Homeowners living on wildfire prone wooded lots in Nevada County are finding it increasingly difficult to find a company to insure their homes, an impending crisis that some local agents predict could put a damper on any real estate comeback.
Large name brand insurance companies are becoming more restrictive, more costly and in extreme cases dropping wildfire coverage altogether in high-risk areas of California — like Nevada County — because it makes good business sense.
“We've re-examined the way we write insurance,” within the last year, said Michael Geeser, a spokesperson for AAA. “This is not just geocentric to Nevada County. This is going on across the country.”
In recent months, some insurance agents have left town after finding it not worth their while to continue trying to write policies in the area.
Rick Russo owner of Russo Insurance Agency Farmers Insurance Group shuttered his Nevada County office of 20 years last December and moved to Roseville where valley stucco homes within 10 minutes of a fire station meant a more reliable customer stream.
“It's easier to write insurance policies in Placer County than it is in Nevada County. … From an insurance company perspective, you have to recognize what the risk is,” Russo said.
Homeowners, including seniors living on a fixed income, are scrambling to replace coverage they lost or pay higher premiums while others are trying to insure a new home.
As few as 10 percent of people seeking homeowner insurance in Nevada County actually find it easily through traditional big name companies like Allstate, Farmers and AAA, said Jeff Dunning, agency owner of the local Allstate insurance branch and a longtime director on the Fire Safe Council of Nevada County.
The remaining 90 percent of homeowners in Nevada County will have to shop around.
Depending where they live, the search can often lead people to a dwindling pool of plans to choose from at double the expense or to the non-admitted market that goes unregulated by the California Department of Insurance.
Areas such as Alta Sierra, Cascade Shores, Banner Mountain, sections of McCourtney Road, the Highway 49 corridor, Chicago Park and Peardale are all examples of neighborhoods where fire insurance has become more difficult to find.
“This is a crisis that's going to be hitting,” as soon as the real estate market and the construction industry pick up, Dunning said, who also served on the county's Fire Plan Committee.
Four years ago, Allstate stopped offering homeowner's insurance in California. Instead, agents broker policies through other companies.
He says the days of calling an agent and writing a policy over the phone are over.
“You can't close escrow on a home unless you have an insurance policy. It's going to be so expensive, it's going to close a deal,” Dunning said.
Large name brand insurance companies are becoming more restrictive, more costly and in extreme cases dropping wildfire coverage altogether in high-risk areas of California — like Nevada County — because it makes good business sense.
“We've re-examined the way we write insurance,” within the last year, said Michael Geeser, a spokesperson for AAA. “This is not just geocentric to Nevada County. This is going on across the country.”
In recent months, some insurance agents have left town after finding it not worth their while to continue trying to write policies in the area.
Rick Russo owner of Russo Insurance Agency Farmers Insurance Group shuttered his Nevada County office of 20 years last December and moved to Roseville where valley stucco homes within 10 minutes of a fire station meant a more reliable customer stream.
“It's easier to write insurance policies in Placer County than it is in Nevada County. … From an insurance company perspective, you have to recognize what the risk is,” Russo said.
Homeowners, including seniors living on a fixed income, are scrambling to replace coverage they lost or pay higher premiums while others are trying to insure a new home.
As few as 10 percent of people seeking homeowner insurance in Nevada County actually find it easily through traditional big name companies like Allstate, Farmers and AAA, said Jeff Dunning, agency owner of the local Allstate insurance branch and a longtime director on the Fire Safe Council of Nevada County.
The remaining 90 percent of homeowners in Nevada County will have to shop around.
Depending where they live, the search can often lead people to a dwindling pool of plans to choose from at double the expense or to the non-admitted market that goes unregulated by the California Department of Insurance.
Areas such as Alta Sierra, Cascade Shores, Banner Mountain, sections of McCourtney Road, the Highway 49 corridor, Chicago Park and Peardale are all examples of neighborhoods where fire insurance has become more difficult to find.
“This is a crisis that's going to be hitting,” as soon as the real estate market and the construction industry pick up, Dunning said, who also served on the county's Fire Plan Committee.
Four years ago, Allstate stopped offering homeowner's insurance in California. Instead, agents broker policies through other companies.
He says the days of calling an agent and writing a policy over the phone are over.
“You can't close escrow on a home unless you have an insurance policy. It's going to be so expensive, it's going to close a deal,” Dunning said.
Bringing the hammer down
In recent decades, urban sprawl has led to population explosions in Wildland Urban Interface areas where people are lured in by the shelter and beauty of the trees. “People want to be out in nature and that's where all the wildfire danger is,” Dunning said.
As a result, insurance companies have paid dearly in recent years to rebuild high-end communities, in wooded areas like Tahoe and Santa Cruz consumed by wildfire.
Add to that, Calfire's change to statewide wildfire severity mapping and a requirement for 150 feet of clearance around houses and the result is an extremely skittish insurance environment.
“That public information just caused insurance companies to react. … (They) are really bringing the hammer down,” said Joanne Drummond, Executive Director of Fire Safe Council of Nevada County, an organization that gives third party inspections of defensible space that can help a homeowner qualify for insurance.
Besides city limits and areas bordering lakes, much of Nevada County went from bad to worse and is now mapped in orange and red for high to extreme fire danger.
“It's kind of a changing world for our zip code,” Drummond said.
Many insurance agencies use their own color-coded maps and outsource Fire Protection Class Ratings sold to them from independent companies.
Each company is allowed to use a different set of underwriting guidelines. Satellite technology, computer programs and on the ground inspections help insurance companies determine risk factors such as fuel loads, slope, wind patterns and historical fire activity.
Distance from fire hydrants and staffed fire stations and accessibility of fire equipment are also big considerations.
A homeowner who is diligent about clearing around a house isn't guaranteed fire insurance, if he lives on a narrow road a long distance away from a fire station.
Those who can't find an insurance plan through normal channels can turn to last resort alternatives such as a state subsidized and less comprehensive California FAIR plan.
It's a plan that can carry a $4,000 surcharge each year for annual brush removal and is riddled with other drawbacks.
“If it's the only game in town, you're happy to pay for it,” said Doug Becker of Farmer's Insurance in Grass Valley.
Laura Brown is a freelance writer who lives in Grass Valley. Contact her at (530) 401-4877 or laurabrown323@comcast.net.
