If you are buying a home in the foothills or mountains, the surrounding wildfire risk could present you with an insurance surprise, and not the good kind. We’ll help you understand the reasons why brush risk can increase the cost of insurance, the potential problems areas and how to avoid those problems.
The Effect on Buying a Home
There are three ways brushfire risk can delay or prevent a home buyer from closing escrow:
- Limited carriers/higher cost – if a home is determined to be in a high-risk area, or Protection Class (see below), many carriers simply will not be willing to write a policy in that area. This reduction in carriers can push a home buyer into the Surplus Insurance market, where carriers such as Lloyds of London are willing to take on higher risk for higher cost. Unplanned higher costs can affect the buyer’s ability to finance the purchase
- Delays in obtaining insurance – When a Surplus Market quote is the only option, it is not something that an insurance agent can usually do in-house. This means requesting a proposal from an underwriter, which can take a few days, depending on the risk. Also, if the current wildfire season is particularly bad and carriers are withdrawing, the additional demand on Surplus carriers can increase the wait time for a quote.
- Moratoriums – Insurance companies can and do place moratoriums in areas that are threatened by active wildfires (usually by city, zip codes or county). This means that if you are in escrow, with a quote for insurance with ABC Company, and ABC Company places a moratorium on the area where your home is located – you will NOT get a policy with ABC Company (or any other company if the fire is active).
California High Brush Area Guidelines – Concerns for Insurance Carriers
The following are variables that underwriters consider when evaluating wildfire risk:
- Topography: The surrounding terrain and landscape.
- Wind Patterns: Is your home located in an area where the wind patterns blow a fire toward your property?
- Distance to the nearest fire station: You may be near a fire station, but if it’s a volunteer fire station, it doesn’t count. You must have your assigned RESPONDING fire station within a certain distance of your property.
- Distance to a fire hydrant or water supply: It is preferred you are within 1000 feet of a fire hydrant or a large water supply system.
- Roof type: If you have a wood roof and are located in a high brush area, this can be an issue for most insurance carriers.
- PPC (Public Protection Classification): This is a rating from 1-10 (10 = very high fire risk).
- FireLine score: The ISO looks at surrounding fuel or brush, the slope of your home and the ability to access your property at the time of a fire.
Can I get a policy? — Rules of Thumb
These are more like guidelines than rules, but this is a good place to start:
- Is the house less than 1,000 feet from a fire hydrant?
- Is the house less than 5 ‘road miles’ (not as the crow flies) from a full-time Fire Station?
- Is there at least 200 feet of clearance of low brush around the home?
None of these are a guarantee, but if the property is within these guidelines it is likely to be easier to insure. The fire hydrant is probably the easiest thing to look for and possibly to measure.
SOLUTION (yes, there are solutions!)
The first thing we recommend is to start working on insurance early – even before making an offer on the property. Look for a fire hydrant and map the driving distance to a full-time Fire Station in google maps. This will give buyers and agents a quick rule-of-thumb idea of whether obtaining insurance could be a problem.
Next, give us a call! If insurance will be complicated or take some time, we will be able to tell you that very quickly. This will help home buyers and agents set the right expectations during the escrow process. As for Moratoriums – the only thing buyers and agents can do is understand the risks and the realities of the situation, and be aware of those realities before making final plans to buy a home.
Purves Insurance is located in Davis, CA and we are firmly against wildfires.