As insurance companies reassess the fire risk in California, homeowners in Carmel Valley have been getting dropped from their coverage.
The yard of Cynthia D’Vincent’s Carmel Valley home backs up to the Carmel River. Over the last twenty five years, she’s created a garden with a winding stone path, wisteria that drapes down a trellis and two Japanese Maples that arch over a walkway.
All the years she has lived here, she’s had the same homeowners insurance carrier. She says she never had a late payment and never had a single claim. Then, last year, she got word that her insurance company was concerned about the wildfire risk of her property. So, it would not renew her policy unless she made some changes.
“That I had to come in and trim every single tree back to the property line; every single limb, every single branch. And every single plant, for every foot in height, had to be three feet apart,” says D’Vincent.
She trimmed back plants in her garden. She even asked the fire department to come out so that she could take a video to prove they could make it down her narrow street. It all wasn’t enough for the insurance company.
“They said, ‘okay, well, a fire truck can come in, but you are still in a brush zone.’ So because I'm right next to Garland Park, that was a problem for them. There was nothing I could do that would make them happy,” she says.
Requirements that are almost impossible to comply with are something Ryan Hinckley has been seeing more of in recently years. Hinckley is Vice President at HUB International’s Monterey office. HUB is an insurance broker which works with hundreds of insurance companies.
Hinckley says the non-renewals aren’t just happening in Carmel Valley.
“Anywhere prone to wildfire risks, lately. It can even be Carmel-proper area. Some parts of Monterey and even parts of Salinas,” Hinckley says.
Hinckley says they have been able to find alternative coverage for all their clients who have received non-renewal notices. Some have been able to stick with traditional insurers.
Many have had to turn to what’s called a surplus line. It’s an insurer willing to accept a greater risk and whose rates are not regulated by the state. Coverage comes at a premium.
“I would say that it's probably going to be anywhere from 50 to 150 percent higher than whatever they're probably paying now on average and it can go up even higher than that,” Hinckley says.
Hinckley and others in the industry say insurance companies are trying to spread out their risk. They’re relying more on computer modeling to determine that risk. They’re also looking at how recent wildfires played out.
“That’s why you see some of the renewals saying, you know, ‘wind-driven smoke embers’ because fires, where they were domiciled isn't necessarily where the vast majority of the loss has been. It's been where it's traveled to,” Hinckley says.
The California Department of Insurance has seen an increase in complaints about non-renewals. Joel Laucher is a Senior Advisor with the department. He says there aren’t a lot of protections for homeowners whose insurance doesn’t get renewed. Insurers only have to give 45 days notice.
But Laucher says insurance companies are required to have objective reasoning behind their risk assessment.
“So we may want to look at ways that insurers will consider whether homeowners have taken steps to mitigate the risk more at the individual property level rather than using kind of the broad swath that a risk model provides,” Laucher says.
Laucher recommends if you get a non-renewal notice, you check out the Department’s Top Ten Tips for finding a new insurer.
Carmel Valley resident Cynthia D’Vincent was able to find a different insurance carrier. That’s after she put a new roof on her house. She says her coverage is better and only costs a little more. Despite the wildfire risk, she says she wouldn’t live anywhere else.
“I love this. I'm an avid hiker. I walk out the door and there's a trail along the river. It's just it has everything that's important to me,” D’Vincent says.
For Californians willing to take the risk and live in places no insurer will cover, there is the California FAIR Plan. It’s known as the “insurance of last resort” for fires. According to the Department of Insurance, a small, but growing number of California homeowners are finding this is their only option.