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Ask the Expert Q&A: Homeowners Insurance & Wildfire Defense

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Wildfires are a growing risk for homeowners in many areas. To learn more about how homeowners can protect themselves and their property, Crain’s Content Studio spoke with Pamela Alphabet, Regional Practice Group Leader, Personal Insurance, Burns & Wilcox, Scottsdale, Arizona.

How serious is the wildfire threat for homeowners today?

P.A.: Each year, the risk continues to increase. By far, the most wildfires that affect structures occur in California, and this is also where more than half of all the U.S. wildfire losses in insurance are located. Arizona and Montana are up there as well. Drought and climate change are definitely contributing to wildfire risk.

What should homeowners be aware of relative to this risk?

P.A.: They should understand where they are buying or building a home and what kind of risk comes into play. Is it in a wildland urban interface area? Are they buying homes in areas that were previously forested? The more that individuals have been building in those areas, the wildfire risk continues to increase.

How does Homeowners Insurance help them respond to this threat?

P.A.: Homeowners Insurance does typically cover wildfires. Coverage may not be available in certain areas based on the risk analysis of the area, and some carriers have added wildfire deductibles to their policies. In California, if a home is uninsurable due to wildfire risk, the California FAIR Plan can provide a stripped-down type of wildfire coverage. In Arizona or other states with high wildfire risk, some individuals cannot get insurance at all, it may be very expensive, or there may be large deductibles for wildfire.

What unique programs does Burns & Wilcox provide?

P.A.: We have an exclusive wrap product that compliments the California FAIR Plan and is designed for higher-value homes. We can insure up to a $10 million total-insured-value home, whereas the FAIR Plan only insures up to $3 million in total insured value. We also have an exclusive Homeowners Insurance product through Atain, our sister company, that writes in all different areas. As the year progresses, insurance carriers often close zip codes and stop writing policies in those areas due to wildfire risk. Our exclusive product with Atain, launched in January, is open everywhere, and we are seeing a lot of success with that. 

What is Wildfire Defense Systems?

P.A.: Wildfire Defense Systems is a company Burns & Wilcox has contracted with that protects and provides risk management for the private sector. They work in conjunction with the local fire departments on behalf of insurance carriers. All of our policies in 10 wildfire states  California, Oregon, Washington, Idaho, Montana, Wyoming, Utah, Nevada, Arizona, and Colorado — have Wildfire Defense Systems on their Homeowners Insurance. Their services can help to mitigate the risk and prevent more damage, such as by moving flammables or boarding up the home. The partnership is beneficial because this is in addition to local fire personnel.

What steps should homeowners take that complement insurance coverage from a prevention standpoint?

P.A.: They can create a defensible space surrounding their home; it could be 100 feet or 200 feet, and they will want to clear any debris or anything flammable from that area. They can make sure their homes have closed eaves and Class A fire-rated roofs, use non-flammable building materials, and clear tree limbs from hanging over the roof. They want to make sure that their home is as protected as it can be.

Can you share an example that would be illustrative of the types of risks that we’ve been discussing?

P.A.: Last year, Wildfire Defense Systems monitored 12,552 wildfires in the United States. Of those, 161 impacted Burns & Wilcox clients. They dispatched teams to 27 fires directly, impacting Burns & Wilcox clients in six different states, and made 346 visits to a total of 215 Burns & Wilcox insured properties. They also directly saved six homes from burning down.

Is there anything else that you think is important for homeowners to know?

P.A.: A really unique thing about our partnership with Wildfire Defense Systems is that until it began, this service had not really been made available to your “Main Street” type of homes versus just high-value homes. This allows that same service to be offered to Main Street-valued homes, which is important.

What are the greatest opportunities for brokers to get into Homeowners Insurance?

P.A.: Our team has really strong expertise on how to insure homes in wildfire-prone areas. Brokers need to have that understanding and expertise in what type of homes are able to get insurance and where to insure them.

 

Homeowners Insurance / Wildfire Defense 

WHY YOUR CLIENTS MIGHT NEED IT: The risk of wildfires increases each year, with drought and climate change as contributing factors. The Burns & Wilcox partnership with Wildfire Defense Systems provides added risk mitigation strategies for homeowners in high-risk areas, including areas where wildfire coverage may not typically be available for homeowners. 

PROTECTS AGAINST: Wildfire Defense Systems works in conjunction with local fire departments on behalf of insurance carriers to complement the Homeowners Insurance policy in the event of a wildfire. The partnership helps assess risk to homeowners and, in some cases, saves a home from burning. 

EXPERT OPINION: “Last year, Wildfire Defense Systems monitored 12,552 wildfires in the United States. Of those, 161 impacted Burns & Wilcox clients. They dispatched teams to 27 fires directly, impacting Burns & Wilcox clients in six different states, and made 346 visits to a total of 215 Burns & Wilcox insured properties. They also directly saved six homes from burning down.”

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