Mission Critical: Addressing Wildfire Risk Coverage With Your Homeowners Clients

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Over the past five years, the wildfire season has been dreaded by those who live in fire prone areas. From the growing number of wildfire events to the increased severity in intensity and size, it’s clear that these climate-induced, apocalyptic weather conditions aren’t slowing down any time soon.

Wildfires cause damage to over 60,000 structures across the states, costing around $14.8 billion in property damage in 2021 alone.
Source: Restoration USA.

Last year, smoke and ash from wildfires blanketed many areas of U.S. neighborhoods. According to EMBROKER, the narrative for homeowners has dramatically changed due to the distinct probability of wildfires occurring closer to well-populated areas in what looks to be an annual occurrence. 

This year, homeowners in wildfire-prone regions of Colorado, California and other areas, are staring disaster in the face once again. This has prompted homeowners to have a conversation with their insurance agent to better understand whether and how their property is protected. The following can help you be better prepared to assist your policyholders this fire season.

Today, nearly 10% of Californians live in high-risk fire zones. In the event of a loss, the current inflation rate and the cost of time and materials to rebuild has only exacerbated the problem.

As homeowners begin to rebuild, researchers predict that to replace homes in California’s high-risk fire zones could cost an estimated $610 billion.
Source: Mercury News.

• Review and check policy coverages and limits with your client to ensure there is adequate replacement cost for coverage A (the home), coverage B (other structures, such as detached garages, sheds, fences, etc.) and coverage C (personal property, such as clothing and furniture). Are there any new items of value that were acquired during the past year? Get them scheduled onto the policy.

Review the definition of loss of coverage (also known as additional living expenses) and how it is used to help coverage expenses such as hotel costs, food, pet boarding, etc., should the homeowner become displaced due to a fire. This is valuable coverage and something that your policyholders may not be aware of.

Discuss fire preparedness. The website Ready.gov has a comprehensive online fire preparedness guide your homeowner clients can download that lists specific tasks to better safeguard their property and mitigate risks in the event of a fire. 

If you have homeowner clients who reside in a high-risk fire area and who are unable to obtain wildfire damage coverage under a standard insurance policy, help them pursue coverage under the Fair Access to Insurance Requirements (FAIR) plan. The specifics of each plan will vary from state to state, but all plans require licensed property insurers to participate in the pool and share in the profits and losses. A list of FAIR plan administrators in each state can be found here.  

Discuss the importance of fire alerts in helping them evacuate to safety — and to do so as soon as possible. The simplest way to register for local alerts and warnings is by using Wireless Emergency Alerts (WEA). Alerts are sent by the National Weather Service and are short emergency messages that are broadcast from cell towers to any WEA-enabled mobile device in locally targeted areas.

Lastly, advise your policyholders that in the event of fire damage, they need to report a claim as soon as possible. Can they file a claim at your office, or is there an option to report the claim directly to the carrier? Be sure to provide them with the information they’ll need should a claim occur.

When homeowners suffer from a loss, such as one related to a wildfire, it’s important for them know that their insurance professional is there to help them through the claims and recovery process. By reviewing policies early in the season, you can help your insureds be better prepared to mitigate potential risks. 

About FastrackCE

Have you waited until the last minute to complete your continuing education credits? Don’t worry! At FastrackCE, we make it easy for insurance professionals like you to maintain current CE licensing requirements online and at your convenience. When you need us, we can help. For more information, call 800-544-3605, or visit us at fastrackce.com.

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