Utah Homes and Wildfire Risk Causing Insurance Headaches
Report brought to you compliments of Ben Blitch at American National.
We live in a beautiful state full of amazing mountains and green spaces. With the beauty though comes the real risk for Real Estate Properties. As many long-time residents of our great state know, Wildfires can be a common occurrence during Summer in the High Desert. Utah and specifically the mountains, like areas around Park City, have begun to see National Headlines for both it's good and bad. The good doesn’t have an effect on the Insurability of Real Estate, but the bad does.
In Utah, people have often associated buying a high-end home in the mountains with living amongst the trees and spotting the occasional moose while sipping your morning coffee. The picturesque scene has become a nightmare for insurance carriers as of late, however. With the glut of fires in vacation communities of California, Utah’s mountain living has come under the risk management microscope.
Insurance companies determine the risks of wildfires based on past fires, fuel loads, and response from the local fire department. These factors are run through proprietary algorithms for each carrier based upon their appetite for risk and then a premium or declination is determined. As Insurance Agents, our job is to know what our carrier’s appetites tend to be.
A good agent knows immediately if they are going to be dealing with a property that has a high fire score, a 1-100 rating on the risk of wildfire. With the understanding of that score and a simple search of the closest responding fire station, we can place the property with a carrier that will likely take the risk to cover the location.
Recently the cost of major fires in California has ignited an insurance crisis. These losses are now being passed to other western states, like Utah, prone to wildfires. The final factor to consider in the new Homeowners Insurance market of Utah is the massive increase in Home Values. The more expensive the home the more an insurance carrier would need to pay for a loss. Therefore, the perfect storm of higher fire risk, lack of substantial fire fighting resources, and high-value homes have made the area an arena for the battle between insurance carriers and the insured.
Now, you might wonder what you can do to ensure that your higher-risk property will have coverage. First, follow the guidelines for wildfire mitigation on your property. Second, support and vote for increases in the budgets for training and equipment for your local fire jurisdictions. Third, make sure your home is equipped with a central reporting fire alarm. Finally, don’t be afraid of getting insurance quotes, even when you aren’t at your renewal. Often various carriers will have very different premiums for the same coverages based upon their interest in insuring that risk.
If you are curious about what your fire rating is feel free to get in touch with me at any time. I am happy to run the Risk Meter on your property to educate you on what type of risk factor you have.