If you are having trouble getting fire insurance in a rural area such as Auburn or the Sierra Foothills then this information can be helpful for you. Sellers looking to put your home on the market please read this blog since you can be affected when ready to sell your home. Potential buyer looking to buy a home in the country you better read this and take the information to heart. Fire insurance and the ability to get it has been a major problem for not only purchasing a home but also for existing homeowners who have been cancelled or seen their premiums increase tremendously!
In the last 4 years the reported loss of property damage due to our recent fires has been 40 billion dollars. Insurance rates have increased every year for the last 7 years. You or someone you know may have experienced being cancelled by your insurance company even if you haven’t filled a claim. This is due to a re-assessment by carriers using the Protection Class rating and the Fire Line Score to decide how your home fits on those scales.
How Is Your Fire Insurance Being Calculated?
50% of your Protection Class rating is based on if there is a 24 hour fire station within 3 miles of your home. 40% of your score is based on if there is a fire hydrant within 1,000 ft from your home. And the remaining percent is based on if there is an emergency communication system in the area.
As for the Fire Line score, that has to do with a scale of 1-30 and involves the slope of your land, road access in and out of your property and other criteria such as proximity to high fire areas like canyons.
Some large insurance companies actually have been restructuring your fire insurance plan but keeping your rate the same. So, it is encouraged that you review your existing policy and make sure you have enough coverage. The average cost of insurance for homeowners in the Sierra Foothills is around $3,500 through standard insurance companies. However, it can be as high as $7,000-$17,000 on the surplus insurance market. It can be frustrating for homeowners who can live across the street or next door to a home that has much lower fire insurance. This can be due to the Protection Class and Fire Line ratings and it really seems unfair.
For those properties that can not qualify for any fire insurance, which by the way is not that uncommon and will be increasing, you may need to resort to the California Fair Plan . This type of insurance is used as a last resort https://www.cfpnet.com and is minimal coverage which doesn’t include for instance personal property or debris removal. The rate may seem attractive but homeowners are encouraged to get a wrap policy in addition to cover what the basic policy doesn’t have included. It also is considered a “cash value” policy which may not cover all your home’s value. For buyers struggling to find insurance California Fair Plan may mean the difference between getting insurance or loosing the home you desire.
Consider the f0llowing BEFORE you buy or sell a home!
- Before you list your home either you or your listing agent should have your property evaluated by a trustworthy insurance company to see if your property can be insured. Even though you currently have insurance that does not mean a potential buyer will not have any issues.
- Have your local fire department come out to your home and evaluate your defensible space and fire risk. They often will tell you what they would want you to do such as debris removal, tree trimming, etc… and will issue you a certificate showing the fire department approved your level of fire risk. This can be given to the new potential buyer to give to the new insurance company. It may not change the rate though but can make a buyer feel more comfortable about their safety.
- Defensible space has traditionally been clearing brush and trimming trees up to 150 ft from your home. It is now encouraged by some insurance companies to clear 500-1500 ft from your home. It is important to know the criteria for defensible space is different for the fire department v.s. an insurance company.
- For sellers, having the potential buyer be pre-approved for their loan based on an accurate insurance quote ahead of time can make all the difference. We have seen buyers get pre-approved for their loan and then end up finding the buyer’s insurance quote (insurance is required by the lender) is much higher than planned and therefore they no longer qualify to purchase the home. I don’t need to mention how devastating this can be since it usually isn’t discovered until its in insurance underwriting towards the end of the escrow!
I hope this information can help in some ways to navigate through what is now our reality of getting fire insurance. Just like in other parts of California where homeowners need flood insurance or earthquake insurance, this is a cost now associated with home ownership in rural areas such as Auburn. Its important to keep things in perspective. We have an amazing area to live in and experience everyday. With that luxury we pay a price to be blessed with so much beauty around us.
Have you been cancelled by your insurance company? If so, what happened?
Are you looking to buy or sell a home in a rural setting but have concerns about insurance?