The Arizona Republic (Phoenix)
Spooked by devastating wildfire seasons, the nation’s top insurers are inspecting homes in Arizona and other high-risk areas throughout the West, and, in extreme cases, threatening to cancel coverage if owners don’t clear brush or take other precautions.
The inspections have angered homeowners and watchdog groups that accuse the companies of trying to cut risk at the expense of customers, even while industry profits soar.
“It certainly isn’t fair for these insurers to be dumping these last-minute requirements on homeowners,” said Carmen Balber of the Foundation for Taxpayer & Consumer Rights.
“It does make sense to require homeowners to take reasonable precautions, but some of the excessive demands that we’ve heard from homeowners are over the top.”
The requirements can range from clearing brush to cutting down trees or even installing a fireproof roof.
In Arizona, major insurers say they are committed to writing new policies and covering homes. They say they aren’t interested in canceling anyone’s coverage, but they do warn that if a resident is asked to minimize his fire risk and refuses to do so, the policy might not be renewed.
“If there was someone who said, ‘You know what? I’m not going to do that. I like it the way it is,’ and they chose to make that decision, then we might exercise our right under the law in Arizona to non-renew their policy,” said Luwanna Nielsen, spokeswoman for State Farm Fire and Casualty Co.’s Tempe office.
Shelley Beeler, a spokeswoman for Allstate in Arizona, said the company realizes that there is a major risk for wildfires, especially in the northern part of the state.
“They will look to see what kind of material their roof is made of, are the crowns of the trees touching, are there branches touching the house,” Beeler said. “Generally, that stuff is fixable.”
Catastrophic fires, including wildfires, caused $6.4 billion in insured losses between 1986 and 2005, said Loretta Worters, a spokeswoman for the Insurance Information Institute.
An industry analyst said the home inspections fit into the larger shift by insurers away from catastrophe-prone areas after the 2004 and 2005 hurricane seasons.
“The hurricane seasons were huge, huge wake-up calls in terms of insurers realizing that they did not understand the risks that they had put on their books,” said Donald Light, a senior analyst with Boston-based Celent.
Allstate also recently announced it would no longer underwrite new homeowner policies in California, citing risks from wildfires and earthquakes. The company is also seeking a 12 percent rate hike for its 900,000 existing customers.