Placement capacity for high wildfire areas remains extremely limited and expensive relative to the balance of the property space after four consecutive years of large losses. While placement has been difficult for businesses such as wineries and other agriculture-related businesses during this time, many other industries, as well as families, are experiencing the insurance repercussions in wildfire areas for the first time. We are beginning to see carriers’ wildfire scoring systems evolve – each carrier with their own wildfire score system expanding their zones into areas not previously recognized as wildfire areas. Some carriers have even deemed entire counties wildfire “prone”.
Over the last few months, Excess & Surplus Lines (E&S) insurance markets have further cut back on their capacity deployment i.e. the amount of limit they are willing to provide per client. These insurance markets who have been willing to provide up to $5M limits in the past, are now only willing to participate when splitting the risk 50% / 50% with another insurance carrier (quota share), with a maximum of $2.5M limit deployed. Rates continue to be high at an average $1.00 per $100 of property values exposed. And as always, fire preparedness continues to be necessary with all carriers.
Recent news suggests, as peak wildfire season approaches, many wineries in California State’s $40 billion wine industry are unable to protect themselves from fires in several crucial ways. In addition to the fear of fire, winemakers and crops are at risk from smoke damage to grapes, forcing many to abandon their entire production in 2020. Many are finding their Plan B (code: insurance) is either impossible to get or wildly expensive. Some winemakers report increases to their premiums of 300% or more.
What to do if denied by traditional insurance markets?
While not the end-solution, the California FAIR Plan is an option – and we’ll help you navigate the process.
The California FAIR Plan is a last resort insurance plan for residential homes, commercial property, and businesses that were denied coverage in the traditional market. It is a state-mandated association of all California licensed property insurance companies formed to guarantee all property has access to insurance coverage. In 2019 enrollment into the CA FAIR plan jumped a drastic 225% and has increased further over the last few years. With the influx of submissions, the FAIR plan is experiencing, they have begun to review and upgrade their rating system and product offering.
The FAIR Plan provides insurance for anyone with property in the state of California and who has tried, but cannot get insurance through the traditional voluntary market:
- Homeowners of primary and seasonal homes
- Personal Property for Renters
- Personal Property and Additions, Improvements, and Alterations for Condo and Coop Owners
- Townhouse Owners
- Mobile Home Owners
- Recently added, SB11, signed July 26, 2021, by Gov. Newsom, expands California FAIR plan access to wineries and farms
We’ll work with you to evaluate not only what a FAIR Plan policy covers, but what it does not cover, so that you can make informed decisions on whether supplemental coverage is necessary for you and your home or business.
Contact the ABD Team today to discuss your plans for wildfire season.