RENO, Nev. (KOLO) – Fire prone homeowners are being left behind as insurance companies are dropping coverage.
Things may be calm and easy going now, but wildfire season is fast approaching. It’s stressful enough but this year, there’s added fear as more and more insurance companies are pulling back coverage from fire-prone areas, leaving homeowners with limited options.
Last year, State Farm alone canceled 70 thousand policies in California. State Farm said too many buildings are being destroyed by climate catastrophes, and inflation is making it too expensive to rebuild, making it so they can’t protect their investments any longer. Denise Bremer, the President of Incline Village Realtors, explains that our proximity makes us the logical next step.
“Because we do border California, they see that we’re forested and say: “guess you’re the next community,” Bremer said.
For distressed homeowners the problem is exasperated when insurance companies pick and choose who they decide to ensure.
“It’s all different at this point. “They’re all going to insure someone so that they can say they’re insuring in our community because they’re only going to absorb so much risk at that point,” Bremer said.
Without insurance, many homeowners can find themselves in big financial trouble.
“Lenders aren’t going to lend on anything that’s not insurable,” Bremer said.
Because of this, contracts have been canceled because buyers can’t get insurance, creating a trend where buyers can’t buy, and sellers can’t sell. If this pattern continues Bremer says the long term impacts could continue to harm an already difficult housing market.
“Housing prices will go down is the bottom line. If you can’t get insurance, you won’t buy, and if you put your house on the market the value will go way down because there are no buyers,” Bremer said.
The rippling consequences make it more difficult to build new homes because of a lack of insurance options. Bremer does say, however, there are tactics you can try to keep insurance companies from dropping you. She suggests things like “defensible space” and “home hardening.” Both tactics involve the area between a house and an oncoming wildfire where the vegetation has been modified to reduce the threat and to provide an opportunity for firefighters to effectively defend the house. Doing this in addition to bundling insurance options could keep you protected.
“I’ve heard those that keep their insurance bundled won’t get dropped because the insurance companies will make more money on the auto, and umbrellas, and life insurance,” Bremer said.
On top of that, the Incline Village Realtors are collecting data to send to Scott Kipper, the Insurance Commissioner for the state of Nevada, to then use to write legislation to help combat this issue.
“For instance, in California, and other western states, they have a FAIR Plan which is basically a state-based insurer of the last resort. Nevada doesn’t have one,” Kipper said.
California’s FAIR Plan offers limited insurance to homeowners who cannot secure a plan through a private insurer. This serves as a temporary safety net for property owners until traditional insurance coverage becomes available. Negotiations for a legislative solution considered whether to allow companies to use forward-looking catastrophe models, rather than past losses, to set insurance rates, as they currently do for earthquakes.
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