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Wild fires and insurance

CalGalTraveler

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I agree that there will be more state plans as a backstop. My understanding of the Calif Fair plan and plans such as earthquake, are akin to catastrophic health insurance Our EQ insurance has a 10% deductible on the rebuild value of the home. Not sure if state plan has similar.
 

vikingsholm

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We renew next month. We can't believe that we have retained coverage since we moved into our home in 1987 as we live on the edge of a canyon preserve. Our current policy covers us in case of a wildfire, but as reported the insurers don't want to provide that coverage any more. One of our kids lives in a town called Truckee, essentially in the middle of a forest. They could not obtain insurance that covered wildfire, but it is required by the bank so they have a state sponsored policy through CA called the FAIR plan. It costs them an extra $5k per year. Everyone calls it the "Truckee tax".
I read that FAIR is unfortunately woefully underfunded, with so many new policyholders too.
 

klpca

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PSA...I have a relative in San Diego who was notified of insurance non-renewal because the insurance company claimed lack of defensible space. Apparently they had either drone or satellite images of the property.

My relative was able to cut down the trees and bushes before the cancellation deadline and their broker was able to appeal and was reinstated.

Bottom line: You can appeal if they tell you why they are cancelling and fix the situation. Of course this was before the LA fires. YMMV
I know two people who were canceled because of mildew growth on their tile roofs - again done by drones. It was just that yellowish mildew that is everywhere here. They could only remediate by paying someone else to have it power washed. The insurance company claimed "lack of maintenance" as the reason for the cancelation. So ridiculous. One was my former boss and he's super meticulous about maintenance but power washing his roof was not on the short list.
 

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CalGalTraveler

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@klpca The case I cited earlier also had mildew/mold in the roof. It was corrected and the owner provided photos and proof of payment to outside professionals and was reinstated.

They were devastated to hear of the non-renewal but the broker advised to correct and appeal. They had no idea they could appeal
 

klpca

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@klpca The case I cited earlier also had mildew/mold in the roof. It was corrected and the owner provided photos and proof of payment to outside professionals and was reinstated.

They were devastated to hear of the non-renewal but the broker advised to correct and appeal. They had no idea they could appeal
The mold/mildew thing is so ridiculous. These are concrete roof tiles. There is zero risk for having some mildew on them. They are just looking for a reason to cancel. I understand the fire risk mitigation and I don't blame them, but the mildew is stupid. And they use a drone to determine that it is there but make you pay to remediate instead of allowing you to do your own power washing and use the drone to determine that the issue is remediated. It cost my boss $800 to have some guy with a power washer clean the roof. That said, someone in their 70s probably shouldn't be up on a roof power washing anyway.
 

CalGalTraveler

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Yep. My relative paid $800 to power wash the roof and spent another $300 to clean out gutters. Seems to be the going rate.
 

Ken555

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I read that FAIR is unfortunately woefully underfunded, with so many new policyholders too.

The insurance companies are responsible for picking up the tab if it runs out of funds, from what I understand.
 

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Newly returned to CA, I'm still catching up on some things. Apparently, when CA approves casualty insurance rates, the approval is based solely on past loss history. Forward-going hazard assessments are not considered. When applying this to a place such as Pacific Palisades, the insurer sees an obvious fire risk. The state does as well - it is identified as high fire hazard area. Nevertheless, since there isn't a past history of wildfires in the Palisades area, premium adjustment to reflect that risk is not allowed.

Add to that that CA is the only state that does not allow insurance rates to include the cost of reinsurance.

Given those fenceposts, it strikes me that the only prudent course of action for an admitted insurer is to pull out of the market and stop writing money-losing policies.

At least CA sets rates by actual loss history, something that cannot be manipulated. Some years ago, NC started allowing insurance companies to use computer models, which can be manipulatead easily by how the model is set up. Once they did that, the eastern part of the state started seeing massive rate increases based on what the computer models claimed on wind coverage losses due to hurricanes. For lots of reasons, historic wind loss has been more in the western part of the state, contrary to the computer models, and that has been continuing since those models started being used.

Our insurance rate setting involves the NC Rate Bureau, which represents the insurance companies making a proposal to the state Insurance Commissioner, who is elected, and will almost always reject any significant rate increase. Then it goes to court to get resolved, usually somewhere in the middle. The Commissioner won't do anything about the computer models because that would make the center and west of the state pay their fair share, and there is a lot more population there to vote. There has been periodic discussion of a class action consumer protection lawsuit against the computer models.
 

Carolinian

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I know two people who were canceled because of mildew growth on their tile roofs - again done by drones. It was just that yellowish mildew that is everywhere here. They could only remediate by paying someone else to have it power washed. The insurance company claimed "lack of maintenance" as the reason for the cancelation. So ridiculous. One was my former boss and he's super meticulous about maintenance but power washing his roof was not on the short list.

The insurance companies here have the owner submit photographs prior to or at renewal. For our out of town rental properties, I ask our broker to take them and send them to me. One year, the insurance company quibbled about a couple of small trees they decided were too near the house on one of our properties, something that they had not mentioned before, so I sent a $12/hour handy man over to deal with it. It was no big deal to remedy it to their satisfaction. Those mildew demands, however, do seem to be way off base.
 

Patri

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A friend was notified by their insurance about the condition of their shingles, obviously seen with a drone, and given a certain amount of time to replace, in order to renew their policy. I have heard of them requiring people to remove trees. I wish that would happen to my neighbors. When one tilting pine goes down, it is going to knock out internet and electricity for several of us. When a huge sycamore falls, it will get someone else’s shed and maybe house.
 

rapmarks

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We have friends down in Punta Gorda, Fla. After their insurance premium skyrocketed last year they decided to skip insurance altogether. They feel they’re in their late 70’s anyway and will take the risk.
Geeze, what will they do ? Live in their car?
 

WinniWoman

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Geeze, what will they do ? Live in their car?
Don’t know. They seem to have plenty of money. She’s already had cancer and other medical issues. He’s starting to have trouble walking.But they still travel a little, cruises, etc.

Maybe they figure if they have to they’ll just go into assisted living.
 

CalGalTraveler

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Or live on a cruise ship?

I was told by an insurance agent that some of the Truckee homeowners who were elderly on fixed income and cancelled, stopped paying for insurance and are taking the risk if their home burns. Most of the older homes in the area are converted vacation cabins. They did not spend much to buy the property decades ago and they would still own the valuable land to sell to a developer. The land is probably worth more than what they originally paid decades ago.

There are homes that are second homes as well. If it burns, homeowners not displaced and could put a trailer or tiny home on the land if desired until they decide what to do.
 
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WaikikiFirst

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mold/mildew thing is so ridiculous. These are concrete roof tiles. There is zero risk for having some mildew on them
Is that so? Do you have a list of all the claims against all the homeowners' policies over the last yr? Ever heard of insurance SCAMS? Many of the more recent SCAMS involve MOLD. Roof spaces &/or attics need to be ventilated. Maybe mold can be blown from the roof into the ventilation under the soffits or elsewhere and grow mold in the attic. Maybe it can transfer into the upstairs bathroom. If you want your insurance to pay to remediate mold, you should consider it fair to be diligent about removing mold from your house, even if it isn't on your "SHORT LIST".

I had jury duty last summer. The case was basically a mold scam being perpetrated by a so-called "tenant" to live in an apt for 3 years without paying rent. It was unbelievable. Jury is not free to "discuss" amongst yourselves before the trial ends. I kept looking around wondering what the other 11 thought. I thought it was clear as day and a complete disgrace that the US "justice" system let it go for so long. Well, 10 of the other 11 agreed with me. The 12th voted our way but kept "feeling sorry" for the "tenant", not really getting what a complete con-artist she was. I could give 2 more levels of details of the LONG-CON.

So, I think you know far too little about the insurance industry to have such an opinion. I think you appreciate far too little about how scams increasingly impact the US economy and also how much YOU pay for the scams. You pay for scams regardless of whether you commit them or not, just as you pay for the police regardless of whether you or your friends ever commit a crime. I am sure you are sure the insurance company knows you would never scam them.
 

WaikikiFirst

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who has ever heard of "Social Inflation"?
anybody who cannot easily define what that really means is way out over his/her skies discussing changes in the cost of insurance over the last decade or more.
 

pedro47

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I feel every homeowner insurer carrier will increase premiums in 2025/2026 to cover the 8 billions dollars or more loss in the California wild fire and just think hurricane season for 2025 have not hit the United States. IMHO
 

WaikikiFirst

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8 billion
Huh? Where did you get that #? From what I know of the US insurance industry, I think you're low by a factor of 3 or more. Maybe much depends on how many homeowners' policies cover replacement cost or original cost? but it is also autos, "business interruption", and more
 

Ken555

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I feel every homeowner insurer carrier will increase premiums in 2025/2026 to cover the 8 billions dollars or more loss in the California wild fire and just think hurricane season for 2025 have not hit the United States. IMHO

Wow, that's off by a serious multiple.
 

Carolinian

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I feel every homeowner insurer carrier will increase premiums in 2025/2026 to cover the 8 billions dollars or more loss in the California wild fire and just think hurricane season for 2025 have not hit the United States. IMHO

I think you are probably right because they all buy reinsurance. It is clear that the companies heavily exposed in California will be tapping their reinsurance, which will raise premiums for that. Indirectly that will raise the premiums on all insurance. With companies that are themselves heavily exposed in California, they may also be trying to make it up in other states more directly.
 

Carolinian

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A friend was notified by their insurance about the condition of their shingles, obviously seen with a drone, and given a certain amount of time to replace, in order to renew their policy. I have heard of them requiring people to remove trees. I wish that would happen to my neighbors. When one tilting pine goes down, it is going to knock out internet and electricity for several of us. When a huge sycamore falls, it will get someone else’s shed and maybe house.

Trees are one of the big factors that result in wind damage in hurricanes. The weight of a large pine will take it all the way through a house to the ground if it falls. Close to the coast, people are well aware of that danger and tend to cut back any trees that may be a danger. The farther one goes inland, that is much less likely to be done. That is why in NC, there is historically more wind damage claims farther inland than close to the coast.

From what i am seeing on the fires in LA, trees are also a factor there, as they can catch a wind driven ember, catch fire, and then that fire can spread to adjacent houses.
 

T_R_Oglodyte

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From what i am seeing on the fires in LA, trees are also a factor there, as they can catch a wind driven ember, catch fire, and then that fire can spread to adjacent houses.
There are many trees left standing while everything around has burned to the ground, particularly taller trees. It's the wind-carried embers that are the big issue. With a tall tree, the ember drops to the ground. But when the ember lands on something combustible on the ground, then the fire spreads. And, of course, the brush/chapparal grows close to the ground.

The embers are not small, either. A couple of years ago I was watching a night-time live video stream from a fire in southern California. They zoomed in on a house that was burning near the top of a nearby hill. The material that was being lofted away and carried by the wind appeared to be large pieces of wood, such as 2x4 studs up to two feet long, fully engulfed in flame. That's not really an ember; it's a fire bomb.

One result is that there really isn't a continuous advancing flame front. It's more like a moving ignition zone that is a couple of miles wide, within which spot fires break out, grow, and merge. That spot outbreak pattern is what leads to random structures that are seemingly untouched while everything around them is completely burned. It also makes fighting the fire much harder. When there is an advancing flame front, you can attack the front. You can stop it, or hinder the advance in certain directions. But when disconnected spot fires are breaking out all over the place, you don't enough people and resources to fight everyone of those areas. So there is little ability to direct or control the fire's advance.

Another important factor is that, while the fire may have started in open country, once it enters residential areas it becomes fueled by structures. That really makes it more like an urban fire, similar to the fires that periodically broke out in cities in the 19th century, or like the war-time fires in cities set off by firebombs. That was something that I noted with the Oakland Hills fire in 1991, when I was living in the East Bay. The fire started in grassland at the top of the Oakland Hills, but as it went downhill, it entered residential areas, and just skipped along - it didn't burn house to house. Again, there were the flying embers that made up the fire front.


**************

This was an interesting article. It's from the LA Times, which is a paywall site. The link below is from the Seattle Times, which usually allows access to a limited number of free articles per month. So it should be more accessible.

 
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T_R_Oglodyte

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A followup thought to my immediately previous post.

I think that simply mandating that casualty insurance companies write policies insuring risks that they don't want insure is the wrong thing to do.

If we want to mandate anything, another option would be to mandate that casualty carriers make policies available to people who are rebuilding, but allow the carriers to price the policies as they wish and to include any fire-risk conditions they deem appropriate for the policy that they are writing. IMHO - insurance companies will quickly staff up and develop expertise to offer and price policies based on characteristics of the rebuild. This will help people to see through their pocketbooks the value of their rebuilding decisions.
 

klpca

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Is that so? Do you have a list of all the claims against all the homeowners' policies over the last yr? Ever heard of insurance SCAMS? Many of the more recent SCAMS involve MOLD. Roof spaces &/or attics need to be ventilated. Maybe mold can be blown from the roof into the ventilation under the soffits or elsewhere and grow mold in the attic. Maybe it can transfer into the upstairs bathroom. If you want your insurance to pay to remediate mold, you should consider it fair to be diligent about removing mold from your house, even if it isn't on your "SHORT LIST".

I had jury duty last summer. The case was basically a mold scam being perpetrated by a so-called "tenant" to live in an apt for 3 years without paying rent. It was unbelievable. Jury is not free to "discuss" amongst yourselves before the trial ends. I kept looking around wondering what the other 11 thought. I thought it was clear as day and a complete disgrace that the US "justice" system let it go for so long. Well, 10 of the other 11 agreed with me. The 12th voted our way but kept "feeling sorry" for the "tenant", not really getting what a complete con-artist she was. I could give 2 more levels of details of the LONG-CON.

So, I think you know far too little about the insurance industry to have such an opinion. I think you appreciate far too little about how scams increasingly impact the US economy and also how much YOU pay for the scams. You pay for scams regardless of whether you commit them or not, just as you pay for the police regardless of whether you or your friends ever commit a crime. I am sure you are sure the insurance company knows you would never scam them.
This stuff is essentially yellowish mildew. It starts green when we have rain, then turns yellowish when it dries. It's everywhere - on sidewalks, driveways etc. It was just a bs reason to drop coverage. And FYI, my family has been in the insurance industry since the late 70s through 2018. We all form our own opinions.
 

Bucky

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