How Wildfires Are Shaping Property Insurance
The Challenge of Increased Wildfire Risk
The rising frequency of wildfires has prompted many insurance carriers to reassess their risk exposure by analyzing historical data, updating predictive models, and incorporating advanced technologies such as satellite imagery and geographic information systems to better understand and manage the potential for future losses. Consequently, some carriers have chosen not to renew policies for homes located in wildfire-prone areas. This trend is primarily driven by the high risk and potential for substantial financial losses associated with insuring properties in these regions.
Notification of Non-Renewals
For homeowners affected by non-renewal decisions, insurance carriers are legally obligated to notify policyholders at least 90 days before the policy cancellation date. This advance notice is crucial, as it provides homeowners with a window of opportunity to seek alternative insurance coverage.
The Search for New Coverage
During the 90-day period following a non-renewal notice, homeowners must actively shop for new insurance policies. Consider using resources such as online insurance comparison tools, consulting with insurance brokers, and reaching out to local insurance agents for personalized advice to ensure you find the best coverage. It is advisable to explore options with multiple insurance carriers to find the most suitable and affordable coverage for their homes.
The California FAIR Plan: A Safety Net
For homeowners unable to secure insurance through the standard market, the California FAIR Plan serves as an essential fallback option. This plan offers basic fire insurance coverage, ensuring that homeowners in high-risk areas can still obtain the necessary protection for their properties.
Connecting to Colorado
While this newsletter focuses on California, the lessons and strategies discussed are increasingly relevant to other states facing similar wildfire risks, such as Colorado. Colorado has also experienced a rise in wildfire incidents, prompting homeowners and insurers to adapt. Just like in California, it is crucial for Colorado residents to stay informed about their insurance options, understand the importance of early notifications for non-renewals, and explore available safety nets. While the Colorado FAIR Plan is not currently active, it is expected to launch in the first months of 2025. Established through legislation in 2023, the plan is in the process of setting up its operations, with access to policies anticipated early in 2025.
By staying informed and proactive, homeowners can better navigate the challenges posed by the evolving wildfire landscape and its impact on property insurance in both California and Colorado.
It is important to have an insurance agent review your insurance policies with an updated reconstruction cost, coverage options, and any new exclusions. This review ensures you are adequately prepared and protected against the evolving risks discussed in this newsletter, providing peace of mind and comprehensive protection for your property.
If you have any questions or need assistance with your insurance needs, please do not hesitate to reach out. We are here to help you secure the best protection for your property and provide guidance through these challenging times.
Eve Valencia
Farmers Insurance Agency Producer