In an Aug. 14 Wall Street Journal article, “Where Wildfires Burn, Insurers Get Cold feet,” M. P. McQueen reported on the industry’s reluctance to write homeowner policies in many wildfire-prone Western states.
Last year, Allstate stopped selling new homeowner policies in California because of wildfire losses, and other insurers are following Allstate’s risk-reduction policies. In the article, McQueen advised that the industry is looking to lessen their liability in Arizona, Idaho, Oregon, Washington and Alaska. Insurers are using satellites and home inspections to determine wildfire hazards. McQueen reported that an increasing number of insurance companies are tightening standards and refusing to write policies for homes on steep slopes. The reason: Mountain wildfires travel faster and are more difficult to contain in this terrain. Property owners serviced by rural volunteer fire departments are encountering difficulties in securing insurance.
Wildfires are natural occurrences. In the past, these events were not significant threats to an insurance company’s profitability—but they are today. Extensive and expensive residential development in wildfire areas has exposed underwriters to unacceptable risks, and they are declining responsibility. Over the past several decades, insurers have weighed and measured a number of natural perils and have adjusted or deleted coverage when deemed necessary. For instance the industry has removed landslide coverage from all homeowner policies.
McQueen does not address homeowner-policy issues in Eastern states, but the industry is concerned with all high-risk wildfire regions. Western North Carolina’s dense mountain-slope development is motivating insurers to re-evaluate their risk exposure. The region’s topography and environment meet the industry’s definition of a disaster waiting to happen: thousands of expensive homes built in not easily accessible, wildfire-prone areas.
WNC mountain subdivisions and homes are being investigated and ranked for wildfire hazards. Last year the Leatherwood Mountains Development was evaluated for wildfires by the North Carolina Forest Department. All of the homes in this western Wilkes County subdivision received a high-risk rating. (For additional information, please visit the October 2007 Leatherwood Development Firewise Assessment Web site.)
Homeowners living in designated hazard areas will experience declining property values and rising insurance premiums. Before buying WNC mountain real estate, talk with your insurance agent about the availability and costs of insurance. The subdivision and property should meet Firewise standards.
— Lynne Vogel