4 Things You Need to Know About Wildfires in California Affecting Home Insurance

How Wildfires in California are Affecting Home Insurance

Record-breaking destruction

The 2018 wildfire season was the most destructive wildfire season on record in California consisting of 7,571 fires that burned an area of 1.7 million acres—the largest amount of burned acreage recorded in a fire season, according to the California Department of Forestry and Fire Protection (Cal Fire) and the U.S. Forest Service.

Strict Underwriting Guidelines

Reports indicate that the California wildfire insured losses have totaled upwards of $1 Billion, and nationally have totaled upwards of $10 Billion, which have resulted in a dramatic shift in the home insurance industry across the country and heavily in California. Many carriers are imposing stricter underwriting guidelines for new and existing business, implementing more extensive property inspections, increasing Homeowners insurance premiums in California (15-50% rate increases), and in some instances non-renewing business that is in a significant wildfire exposure area.

Increased Personal Line Restrictions

Following suit with stricter underwriting guidelines, some Personal Lines carriers have begun tightening their restrictions on non-payment cancellations–and will not reinstate policies whose premium is late or lapsed. In situations where a policy has been cancelled for non-payment, there is still the option to rewrite coverage. However, it may be subject to much higher rates as a result. We recommend reinforcing to your clients the importance of not allowing their insurance policies to cancel due to non-pay, and suggest they get set up their policy on “Automatic Bill Pay” to avoid any potential payment issues.

Scheduled Power Shut-Downs

In an effort to prevent new wildfire breakout, Pacific Gas & Electric Company (PG&E) may start shutting down power to certain parts of California during the summer months. Criteria for power shutdown include but are not limited to the following: A Red Flag warning declared by the National Weather Service, Low Humidity levels of 20% and below, Dry Fuel Conditions, and Heavy Winds. PG&E states they will make every effort to provide an advanced notice of any pending power outages through various channels, and we recommend updating your contact information on www.pge.com to ensure you receive such notifications.

We Guide Our Affiliate Brokers

Heffernan Network Insurance Brokers has been guiding our Affiliate brokers with solutions for placement of homes that have been affected by the brush zones and fires and providing solutions for specific underwriting restrictions between our major homeowner carriers. We help our Affiliate brokers and their insureds, so click to learn more about how to become an Affiliate today.

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