Burned by wildfire losses, some home insurers opt not to renew policies
Fallout from a series of devastating wildfires in Northern California over the past several years is now reaching to the southern part of the state, as homeowners in Rancho Santa Fe and nearby communities are receiving notices that their fire insurance policies will not be renewed.
“It’s stressful and unsettling” for homeowners, said Vanessa Snodgrass, chief operating officer with Rancho Santa Fe Insurance, a brokerage that is working with affected homeowners to help them arrange for new fire insurance policies after they receive non-renewal notices.
“We’re all in this together. We’re trying to get coverage for our clients and our community,” said Snodgrass.
Although statistics were not available for exactly how many local homeowners have lost coverage, anecdotal evidence suggests the problem is affecting a number of properties in the Rancho Santa Fe Covenant and adjacent communities such as Fairbanks Ranch, Crosby Estates, Cielo and Elfin Forest.
“We don’t know how many homes” have been affected, said Jim Ashcraft, a member of the board of directors for the Rancho Santa Fe Fire Protection District. “It’s not insignificant. I’m hearing from too many different people having this problem”
Snodgrass said her office has been informed by Chubb, a large insurance carrier, that it has opted not to renew up to 5 percent of the policies it has issued in communities throughout California, in areas deemed as being a high risk for wildfires.
According to data released recently by the California Department of Insurance, in areas served by Cal Fire, the state firefighting agency, non-renewals climbed by 6 percent from 2017 to 2018. while ZIP codes affected by wildfires in 2015 and 2017 saw non-renewals rise by 10 percent in 2018. Figures for 2019 were not yet available.
The non-renewals are affecting customers who have paid their premiums on time for years, even if they haven’t filed any claims with their carrier.
One resident of Crosby Estates, who asked that his name not be used, said he had been insured by Chubb for 12 years, until he received a non-renewal notice this year. He said he has heard from several neighbors that they also were not renewed by Chubb.
The resident said the decision is unfair because homes in the Crosby have a number of features — including fire resistant construction materials, sprinklers, cleared buffer areas and fire resistant landscaping — that reduce the risk they will be damaged or destroyed in a wildfire.
In fact, he said no homes in the Crosby were destroyed in the 2007 Witch Fire in San Diego County, although the flames came to the edge of the community.
However, the Crosby resident said insurance companies rely on mapping software that lumps communities such as the Crosby with other areas that are at a higher risk of wildfire damage.
“My beef is that the Crosby is a unique place because it is designed to be fire resistant, but it didn’t do us a bit of good with established (insurance) carriers,” the resident said.
Through Rancho Santa Fe Insurance, the homeowner said, he was able to find a policy with a carrier that is new to California, Cincinnati Insurance, although he is paying about 15 percent more than for his previous policy.
Homeowners do have options for obtaining fire insurance coverage if they are hit with a non-renewal notice.
The Rancho Santa Fe Fire Protection District has drafted a letter signed by the fire chief detailing the location of fire stations, hydrants and homes with fire sprinklers, said Ashcraft, which homeowners can present to insurance carriers.
Snodgrass said there are also alternatives to the established insurance carriers in California. One option is the use of “non-admitted” carriers, which have not been officially admitted to the state insurance market. Homeowners must demonstrate that they have been unable to secure coverage through admitted carriers.
The non-admitted carriers have more flexibility on structuring policies, allowing them to cover higher risk properties, she said. But they generally have higher premiums and they can also have higher deductibles.
Another option for homeowners who can’t get fire insurance coverage in the regular market is the California FAIR Plan, an association of the property insurance companies doing business in California. The FAIR Plan is considered a last resort, and its coverage is limited to $1.5 million in losses. That amount of insurance would be inadequate for homes in such communities as the Crosby, where many of the homes are valued at $2 million or more.
For more information about how to find fire insurance coverage, the California Department of Insurance has compiled a list of tips for homeowners, which can be found at bit.ly/2ZwGIsQ
Get the RSF Review weekly in your inbox
Latest news from Rancho Santa Fe every Thursday for free
You may occasionally receive promotional content from the Rancho Santa Fe Review.