.jpg)
An insurance agent looking to purchase a new home in California ironically has trouble securing insurance for the property due to wildfire risk
The agent, Jeff Lecoeuche, is shopping for a new house in Santa Rosa, CA, where last year’s Tubbs Fire destroyed about 3,000 homes.
“Maybe I’m stupid,” Lecoeuche told Scientific American. “As an insurance agent, I should say ‘Let’s not go there,’ but my wife likes it.”
While Lecoeuche mainly sells policies from Farmers Insurance, he said that he could not find coverage from the company for the house he wanted to buy – located about 15 miles from where the Tubbs Fire erupted.
He then turned to other insurers for coverage for his new home, but found that some of them – such as Lloyd’s of London – were charging roughly 20% more than what he is currently paying for insurance.
Lecoeuche is well-aware of the risks involved with living near areas vulnerable to wildfire, and even warns homeowners about how wildfires are growing in both intensity and frequency.
“People who are rebuilding today in Fountain Grove tell me, ‘Oh, it burned, so we’re good for 50 years,’” he said. “I say, ‘No, actually it’s going to burn again in five years, that’s my thought.’ Because how long does it take for brush to grow? One season. All you need is a rainy winter and you could have brush everywhere. It could burn anytime again.”
According to insurance credit rating agency A.M. Best, home and farm insurers in California lost about $16 billion last year – nearly four times their losses in 2016. Wildfires accounted for most of the losses suffered.
It is no wonder, then, that insurers have been skittish over covering homes where wildfires have been previously reported. In some extreme cases, insurers have flat out refused to renew policies in neighborhoods that have witnessed wildfires in recent times, an industry expert noted.
Personal Insurance Federation of California president Rex Frazier told Scientific American that some property owners in the area reported that their insurers have either refused to renew their policies or have considerably increased their premiums – suggesting a “slow creep” as insurance companies attempt to reduce their exposure.
“We are seeing anecdotal evidence of targeted adverse underwriting actions in high-fire areas,” Frazier said. “We’re not seeing wholesale departure, but it’s reminiscent of the slow creep that we saw after [the 1994 Northridge earthquake].”
But insurance companies pulling out of the California market presents a new challenge to those that choose to stay.
“A lot of companies are saying, ‘We have too much risk in California,’” Lecoeuche explained. “So, the more companies move out, the more it’s an issue for the remaining companies because they have too much risk left, so that’s why the state may have to do something.”
Lecoeuche ultimately decided against purchasing a home in Sonoma County, but not because of the wildfire risk.
“If it was only the fire risk, it would still be OK to buy that house,” he said.
The agent found that the house lies directly on the Rodgers Creek Fault; the US Geological Survey estimated that the fault is among the most likely to create the Bay Area’s next major earthquake.
“It’s like God is saying, ‘Here’s a hint; here’s another hint.’”
