May 21, 2007 in Nation/World

Fire insurers push homeowners

Gillian Flaccus Associated Press
 
Associated Press photo

Despite rebuilding to insurance specifications for fire safety after her home was destroyed in 2003, Denise Taylor, of San Diego, has seen her premium double to nearly $3,000 a year.
(Full-size photo)

Fast fact

Catastrophic fires, including wildfires, caused $6.4 billion in insured losses between 1986 and 2005, according to the Insurance Information Institute.

SANTA ANA, Calif. – Spooked by devastating wildfire seasons, the nation’s top insurers are inspecting homes in high-risk areas throughout the West and 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. The complaints echo concerns raised after Hurricane Katrina, when many insurance companies increased rates or dropped policies along the Gulf Coast.

“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,” she said.

The requirements can range from clearing brush or cutting down trees to installing a fireproof roof.

Insurers and industry groups counter that making people take responsibility for living in the highest-risk fire areas makes good business sense.

“Insurers are in the business of measuring and attempting to put a price on risk,” said Candysse Miller, executive director of the nonprofit Insurance Information Network of California. “We are encroaching further and further into hillsides and areas where we should not build, and insurers have to take a look at that.”

In California alone, more than 6 million homes stand in wildfire red zones, and the number of homes built in remote “wildland communities” is expected to increase by 20 percent during the next decade.

Denise Taylor, a San Diego high school teacher, lost her home to the Cedar fire in 2003. The wildfire east of San Diego killed 15 people, scorched 427 square miles and destroyed nearly 3,000 buildings, including some 300 homes.

Taylor was stunned when her insurer, USAA Insurance Cos., doubled the annual premium for her rebuilt residence, which was 300 square feet larger, to nearly $3,000.

She said the company insisted on insuring the home for $1 million even though she only paid $600,000 to rebuild with fire-safe stucco siding, a fire-resistant deck and roof, brush clearance, no eaves and a stucco wall separating her property from a regional park.

“When you look at the profit margins of insurance companies, it’s not like they’re starving. Sometimes they’re going to have to pay a lot of money, and that’s life,” Taylor said.

USAA spokesman Roger Wildermuth said his company does brush inspections on homes in high-risk areas but has not raised premiums because of the Cedar fire.

State Farm, Allstate and USAA all said they give homeowners an opportunity to fix problems but added that in the most severe cases, customers could be denied coverage if they don’t comply.

In the past few months, Allstate has started inspecting homes in high-risk fire areas in Washington, Oregon, Idaho and Alaska before issuing new policies. The company also has been checking new applicants in danger zones in Colorado, Nevada, New Mexico and Utah since last year and homes in Arizona since 2004.

State Farm has inspected thousands of homes up for new and renewed policies in high-risk areas in those states, as well as in Wyoming and Montana, spokesman Jeff McCollum said.

Both companies have been inspecting homes for years in California, one of the worst wildfire trouble spots, and pointed out that the number of homes inspected makes up just a fraction of their overall customer base.

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