Renewal criteria shrinks, policies dropped
By Solveig Torvik
Early this spring, Ed Parker and Flora Abuan received a letter from PEMCO, the decade-long insurer of their home on a hillside above Myer Creek up Twisp River.
It said an inspector was coming to look at their property, which was damaged by the 2015 Twisp River Fire. They lost six outbuildings, a camper, truck and motorcycle but not their house — which Parker credits to Abuan’s well-watered garden that acted as a greenbelt adjacent to their home.
The company paid their claim, and Parker, a retired Methow Valley School District math teacher, has high praise for the company adjuster who handled it. PEMCO renewed their policy for 2016.
But in May of 2017, the couple received another letter from the company that said: “Because of the increasing risk of wildfire in your area, your home no longer is eligible for coverage with PEMCO.”
Since the 2015 fire, Parker and Abuan have had 42 trees removed from their 20-acre property. They have removed the wood siding from their house and replaced it with stucco. They’ve bought tools and equipment to help them clear brush and grass.
But that work was not finished before the inspector arrived last April, and they have only one road into property. Although the insurer didn’t provide a specific reason for denying coverage, Parker says he thinks both may have played a role.
Parker saw a news report that added to that conviction. According to the report, residents of a Firewise community in Plain, Washington, also lost their PEMCO policies despite having gone to considerable expense and effort to protect their homes from wildfire.
Parker and Abuan’s home now is insured by Safeco — at a higher cost. So is the home of former PEMCO customers Libby Hillis and John Sunderland, who live five miles up Lost River Road beyond Mazama. They were notified last fall that PEMCO would not renew their policy.
Hillis and Sunderland created a Firewise home after they had to evacuate during a fire 15 years ago. Trees and vegetation were removed and there’s adequate access and turnaround space for fire trucks, says Hillis. They live in a riparian area with thimbleberry and snowberry bushes and a conifer forest 80 feet from the home. PEMCO again gave no explanation for not renewing coverage, but Hillis suspects their home’s distance from the Mazama fire station may have been a deciding factor.
“I’d been with them for 29 years,” said Hillis, a woodworker who had five other policies with PEMCO — on three other homes and two vehicles — all of which she has since dropped. While she now pays slightly more for Safeco insurance on their primary home, the other policies cost slightly less. “It’s about a wash,” she said. “I’m happy with it.”
In the wake of escalating losses from wildfires, home insurers are tightening their criteria for issuing policies, both for renewals and new policies.
“They’ve become more restrictive,” confirmed independent agent Melinda Bourn, owner/agent of VIP Cascades Agency (formerly Melbourn Agency).
Homeowners in the Methow Valley who are dropped by their insurer still can get policies from other firms, some of which specialize in higher risk properties, Bourn said. But it’s likely to cost more.
About a dozen people have come to the Bourn agency – the valley’s largest — after having their previous insurance dropped following the 2014 Carlton Complex fire, and all have found new coverage, added office manager Korrie Bourn. The agency does not represent companies such as State Farm or Farmers, which sell policies only through their own agents.
PEMCO has not stopped selling homeowners’ policies in the Methow Valley, company spokesman Derek Wing told the Methow Valley News. But it has decided that a “small percentage” of policy owners in rural Washington and Oregon whose properties fall “outside our profile” will not be renewed, with decisions made on a “case by case basis.”
Among factors driving the company’s decision not to renew some policies is “climate change” that has increased risks of wildfire in some areas, according to Wing. And even if a home has been brought up to Firewise standards, there is no guarantee it will be re-insured, he said.
Some of the risk factors that might cause coverage to be declined:
Steep terrain. “Dangerous terrain will likely only receive air support and if the planes are needed to support ground efforts they may not get any firefighting support,” Wing said.
Narrow roads or just one road into a property.
Extensive decking and soffits where embers may be trapped.
Flammable materials near the home, such as woodpiles and propane tanks.
Home is in an isolated area. “Firefighting resources will be directed to higher population areas.”
Fuel for fire. “Even though a customer may Firewise their property, adjoining properties may have significant combustible vegetation such as sagebrush or grass,” Wing said.
Distance from station
When a homeowner seeks to buy fire coverage, the first thing an insurer does is check how far their residence is from the nearest fire station and how long it takes to travel that distance, according to Korrie Bourn. That initial readout alone can determine whether the request for coverage is accepted or declined by an insurer, she added.
The Washington State Rating Bureau rates homes from 1 through 10 for insurance purposes based on distance from fire stations. Residents of Winthrop and Twisp rate 6 on that scale; people outside town limits rate higher. The higher the number, the higher the cost of insurance. And, perhaps, the higher the chances of being dropped from coverage.
When people are rated 9 or 10, “That’s where the problems start,” Melinda Bourn said.
All but one of the customers who came to her after being turned down for renewal due to fire risk had PEMCO policies, Bourn said; that person was insured by Nationwide.
Farmers Insurance has not dropped any Methow Valley policies due to fire risk, according to agent Audie Gann in Omak, nor does it routinely send inspectors into high fire risk areas before renewing policies. State Farm did not respond to a request for comment.
Several years ago Allstate started sending letters to its customers stating: “As part of your policy renewal this year, we have arranged for an exterior inspection of your home.” Allstate agent Dave Keen said that was done as part of an overall review of the company’s risk, and was not triggered by any specific risk in any locations.
The majority of insurers now send inspectors to assess whether Methow Valley homes are acceptable risks for new fire insurance, according to Bourn, who sells policies for about 20 insurers. But she said inspections are becoming more common for renewals as well, so even long-time customers should expect one.
“They don’t like peeling paint. Or clutter and debris around the house. They like pride of ownership,” Bourn said of insurers. Other red flags to insurance inspectors: trees hanging over roofs or growing too near buildings, burnable vegetation growing near houses, and decks that are not screened to prevent blowing embers from igniting a fire.
After inspections, some companies send customers letters explaining what they should do to their homes to qualify for renewal, said Bourne. Others don’t bother.
Some insurers such as Safeco now offer customers in high-risk wildfire areas a free service that deploys a wildfire protection team from Wildfire Defense Systems, Inc., (WDS) when homes are threatened. WDF dispatches fire engines and personnel to prevent or mitigate damage, including removal of vegetation and application and removal of fire prevention gel on buildings.
For the insurers, the cost of providing this service is less than paying claims for lost homes, said Korrie Bourn. “They pay a little to save a lot.”