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The Effect of California’s 2018 Deadly Fires on Insurance Companies

Across California, the wildfires were beyond devastating last year. With the Camp Fire in Northern California and the Woolsey Fire in Southern California, it felt like the entire state was burning.  

More than 7,000 residential and commercial structures were destroyed thanks to heightened wildfire activity throughout the state. As a result, it is becoming more difficult than ever for California homeowners to obtain and keep fire insurance.

The California Department of Insurance has received nearly forty thousand claims related to the Camp and Woosley/Hill fires with total incurred losses exceeding approximately nine billion dollars, as of last December.

As California wildfires grew larger and more intense last year, most insurance companies were not renewing policies for customers who live in areas that were too risky to cover. The state estimates that over one million homes in California are at high risk for wildfires.  

A California Department of Insurance report learned that the number of homeowners in the wildland urban interface, who spoke out about getting dropped by their plans has tripled from from years 2010-2016. These complaints about increased premiums have risen two hundred seventeen percent.

The state’s most vulnerable homes are not located in cities. They are instead found in areas defined as “wildlife-urban interface.” These homes are built just close enough to woodlands so that a spark from a tree can set a whole town on fire. As more people continue to live in and move to these disaster-prone areas, the amount of property at risk and the subsequent cost will also increase.  

Insurance companies do not have the same recourse and some have been choosing to not renew policies for customers who live in areas that are too risky to cover.  A standard homeowners insurance policy will include coverage for fires. But if you live in what is classified as a high risk area, you will either need to pay more for coverage or obtain insurance through surplus lines. Surplus lines are policies that protect against financial risk that regular insurance companies won’t take on and are not required to follow same state regulations.

To protect homeowners from high rate increases, the state requires insurers to justify increases with reams of data showing that their cost of paying for claims is rising. And after a catastrophic year of natural disasters, insurers are not allowed to increase rates right away. They instead must phase in the increase over twenty years.  

Moving forward, insurance companies will be more creative with their policies. As a result, more homeowners need to purchase additional coverage to make sure they are protected, or move out of problem areas.

There are millions of California homeowners who need to take the right steps to protect themselves and their homes in the event of a similar tragedy.

It is important to have the right insurance broker working with you, who can walk you through these more nuanced provisions and find the right plan for you. This will make a big difference when something catastrophic happens.   

Do you have a question about protecting your home from wildfires in the future? Click here to contact Partners Direct Insurance today!

Courtesy of Cuselleration

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How Homeowners Insurance Can Help Recover Damage from Wildfires

Having homeowners insurance can be a great benefit if there is a fire. The vast majority of policies have coverage that will be a great aid in getting your items repaired or replaced. Even though homeowners insurance can be expensive, house fires are a common occurrence that should not be taken lightly.

Estimates say the number of residential fires each year totals around 357,000 on average. Most of these are started from relatively simple issues, like a burning candle or a basic electrical issue.

It is important to know that homeowners insurance does cover fire damage, and it can be a great boost to you and your family as you recover. However, there are a couple of particulars that go along with it.

What Is Covered Under Homeowners Insurance?

Specifically, homeowners insurance covers the actual structure of a house along with any things that are attached, like a garage.

If your house is damaged or destroyed by a fire, many homeowners insurance companies will help pay for you to live somewhere else, like a hotel, until your can move into a house again.

Homeowners insurance also covers detached structures and personal property in the case of a fire. Detached structures can include items that are on your property but are not actually attached to a home, like a shed or fence. Insurance also extends to your personal belongings, which can include appliances, clothing, and furniture.

Usually, a homeowners insurance policy will help pay for the repair or replacement of these items if your house is affected by a fire or lightning strike. Some policies might even help you pay to replace shrubbery, grass, or trees that were destroyed during a fire.

Click here to learn why you need fire insurance!

What Type Of Homeowners Insurance Do I Need?

Ultimately, there’s no one size fits all policy for insurance. A policy will depend on how much you value your home and the belongings inside. For example, if you have a lot of valuable personal property, then it would be prudent to increase your limits for homeowners insurance across this area.

But you might need to buy additional coverage in top of this if you have valuables, like jewelry, that might have a lower coverage limit. One of the most important factors about homeowners insurance is the dwelling coverage. Homes and construction costs do change in value, so it might be more expensive to rebuild your house after a fire than it is now.

As a result, figure out dwelling coverage limits based on your house’s current valuation. Ultimately, even though there are a lot of house and dwelling fires each year, you can take concrete steps to prevent them. Be careful about open flames, especially from the stove or from candles, and always make sure to extinguish these before you leave.

Additionally, installing working smoke detectors can be a great deterrent against a fire, especially since they can help notify you if something goes wrong in the night.

Putting a fire extinguisher in the kitchen and out in the garage is another smart way to protect you and your house from a fire risk. Just check the expiration dates, as they might not work if they have been sitting around for awhile.

Do you have a question about how homeowners insurance can help recover damage from a fire? Click here to contact Partners Direct Insurance Services today!Courtesy of Cuselleration

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Fire Away: Wildfires in SoCal and the Need for Fire Insurance

It is an all too familiar story on the nightly news: a fast-moving, wind-driven brush fire is threatening lives and property in Southern California. On June 12th, 2018 it was in Irvine, and the brush fire shut down the northbound lanes of the 241 toll road. Helicopters were in the area dropping water on the fire. Initial reports from the air estimated it had already burned 155 acres, but firefighters say the fire had the potential to burn up to 500 acres of property. From a long distance away drivers could see a large plume of smoke.

 

Familiar Story

Just last December, Southern California residents were on guard or fleeing as wildfires spread through Ventura and Los Angeles Counties. The record-setting wildfires were devastating residential communities, as developers have expanded further into land prone to natural disaster by fire. Thousands of people had to evacuate and freeways like the 405 were closed for a time. This fire event reached from just south of Santa Barbara to the Mexico border.

 

California wildfires are unusual in that they come late in the year. The annual wildfire activity is largely due to extremely dry conditions in the region and state’s Santa Ana winds. Between October and March, warm air blows in from the desert, leading to blustery days. The wind dries out vegetation, making it a tinderbox. The strong winds can also knock down trees and power lines. A strong wind can easily send a wildfire into your neighborhood, and with very little notice.

 

Hot Angeles

According to the National Weather Service, 2017 was the second hottest year on record for Los Angeles when measured halfway through the year. If you live in Los Angeles, you know you didn’t need an umbrella in 2017: LA received just 0.11 inches of rainfall from the beginning of October, which is typically LA’s wet season. That means a lot of tree, shrubs and bushes that are easily burned.

 

So I Want to Be Protected: What Do I Do?

Most homeowners’ insurance policies cover fire damage, but if you are considered to live in a high-risk area, for example near a canyon, you may need to pay extra for additional coverage. When entire communities are devastated, like we saw in late 2017, your home replacement dollars might not go far enough, because costs will soar for everything from materials to labor. After the 2017 wildfires, many insurers racked up billions of dollars in fire-related claims. Some stopped writing new policies…period.

 

Why Partners Direct

That’s why it is important to get expert advice to find the right homeowners insurance policy. It can cover both damage to your property and liability. We can seal the gaps in your insurance coverage. What makes Partners Direct unique is that we are a broker for the major insurance companies, including:

 

  • Liberty Mutual
  • Nationwide
  • Hartford
  • CHUBB
  • Mercury

 

Contact us to see how we can be of service to you!

 

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