Insurers Assess Western North Carolina Wildfire Risks

In a recent Wall Street Journal article, “Where Wildfires Burn, Insurers Get Cold Feet,” M. P. McQueen reported on the industry’s reluctance to write homeowners policies in many wildfire prone Western states.

Last year Allstate Corp. stopped selling new homeowners policies in California because of wildfire losses and other insurers are following Allstate's risk reduction policies. In the article McQueen advised that the industry is looking to lessen their liability in Arizona, Idaho, Oregon, Washington and Alaska. Insurers are using satellites and home inspections to determine wildfire hazards. McQueen reported that an increasing number of insurance companies are tightening standards and are refusing to write homeowner policies for homes on steep slopes. The reason: mountain wildfires travel faster and are more difficult to contain on steep slopes. Property owners serviced by rural volunteer fire departments are encountering difficulties in securing insurance.

Wildfires are natural occurrences. In the past these events were not significant threats to an insurance company’s profitability but they are today. Extensive and expensive residential development in wildfire areas has exposed underwriters to unacceptable risks and they are declining responsibility. Over the past several decades insurers have weighed and measured a number of natural perils and have adjusted or deleted coverage when deemed necessary. For instance the industry has removed landslide coverage from all homeowners policies.

McQueen does not address homeowner policy issues in Eastern states but the industry is concerned with all high risk wildfire regions. Western North Carolina’s dense mountain slope development is motivating insurers to re-evaluate their risk exposure. The region’s topography and environment meet the industry’s definition of a disaster waiting to happen: thousands of expensive homes built in not easily accessible wildfire prone areas.

Western North Carolina mountain subdivisions and homes are being investigated and ranked for wildfire hazards. Last year the Leatherwood Mountains Development was evaluated for wildfires by the North Carolina Forest Department. All of the homes in this western Wilkes County subdivision received a high risk rating. For additional information please see the Leatherwood Hazard Assessment Mitigation Plan.

Homeowners living in designated hazard areas will experience declining property values and rising insurance premiums. Before buying Western North Carolina mountain real estate talk with your insurance agent about the availability and costs of insurance. The subdivision and property should meet FIREWISE standards.