Too risky for insurance? Why your homeowner’s insurance can turn into smoke

Estimated reading time: 5-6 minutes

SUMMIT PARK - There are good reasons why insurance companies exclude clients from homeowners ’policies: non-payment, disregard for property, or too many claims.

None of this applied to Peter Ingle, who has been living in his home in the woods of Summit Park for 25 years.

In August 2021, his neighborhood was evacuated when faulty parts of a passing vehicle caused a fire in Parley Canyon near Interstate 80. The fire burned more than 500 acres.

The fire sparked a visit by Ingle’s homeowners insurance company, Allstate, shortly thereafter.

“My insurance company called and said they were just coming to check the areas around our homes to make sure they were in some way safe from the fire,” Ingle said. “We didn’t think much about it.”

In November 2021, Ingle said he had received bad news: Allstate had given up on insurance.

Ingl called his insurance agent, who convinced him to work with Allstate to change their minds.

When February came, Ingle’s agent still didn’t have good news.

“He says,‘ Reality is not your property, the problem is in the neighborhood, ’Ingle explained.

In a letter sent by Ingle from Allstate, the reason for the non-renewal was “overgrowing” on or next to your property.

“I was angry,” Ingle said. “I was angry.”

Ingl said that for more than 25 years, he made sure that his yard had space for defense, keeping the trees neatly pruned and away from the house. Unlike his neighbors, he even had a lawn.

He said that he was never given the opportunity to deal with issues on neighboring properties. Instead, when his Allstate policy fell in April, he was forced to find a new policy with another company. Fortunately, his new policy had the same coverage and was slightly cheaper than Allstate.

Large fires pose a major risk to insurance companies

We contacted Allstate on Ingle’s behalf. In an email, their spokesman told us, “because we protect customers and their privacy, we don’t share specific information about policies and decisions.”

We also offered to get written permission from Ingle to discuss his situation, but we did not receive a response.

Instead, we presented Ingle’s situation to Carol Walker, executive director of the Rocky Mountain Insurance Information Association. Walker said Allstate did nothing against the rules.

“Each insurance company will consider that individual property risk of fire and decide whether it is a risk they can take,” she said.

The risk of fire in much of Intermountain West is no longer limited to remote cabins in the woods. As the drought deepens and homes expand into the interface of wild country and city, more and more Utah live in high-risk areas.

The Wasatch Front is not a refuge from that risk. According to RiskFactor.com, 87% of all properties in Utah - more than a million homes - are at some risk of fire in the next 30 years.

Looking at the Utah Fire Risk Assessment Map from the Department of Forestry, Fire and State of Utah, places like Cedar City, Lehi, Riverton, communities in all the mountains, and even parts of the shores of the Great Salt Lake in the North Salt Lake have “ “extreme” risk of fire.

That risk could affect the ability of thousands of Utah residents to obtain homeowners’ insurance.

“More insurance purchases will be needed,” Walker said. “You may not keep the insurance you have always had, especially if you are in a higher risk area. You may even be pushed to what we consider a higher risk market.”

The case in California

The complete release of insurance companies from the market is something that is already happening in California, a country affected by deadly, catastrophic fires in the last few years.

“Could that happen in states like Utah?” “Yes,” Walker said.

After a camp fire in 2018 destroyed nearly 20,000 homes and killed hundreds in Paradise, California, residents across the state in areas at high risk of fire found themselves in a letter like Ingl’s, telling them to cancel their insurance.

According to the California Insurance Commission, almost 100,000 homeowners saw that their policies were not renewed in 2019, which is an increase of 70% compared to the year before.

The California government has decided to react and in 2018 created a one-year moratorium on insurance companies that cancel or do not renew insurance policies in areas with a high risk of fire. This was adopted at the end of 2019 by the governor’s declaration of a state of emergency. Commissioner Ricardo Lara has extended that moratorium every year since.

Following the application of that moratorium, California recorded a decrease of 19.8% in the non-renewal of postal codes to which that moratorium applies.

The Utah Insurance Commission does not monitor how much Utahna is excluded from insurance, so it is unclear how often this happened in our state.

California is one of 32 states and Washington that offer state-funded insurance plans for people in high-risk areas of severe weather and natural disasters. Utah is not one of them.

Walker warned that the steps taken by California may not be the best idea, because many insurance companies have completely withdrawn from their market.

“Insurance companies have a responsibility to all their policyholders, no matter what type of risk you live in,” Walker explained. “They must be able to take enough premiums to pay claims when we have thousands of homes burned, when we have major catastrophic events, which we are seeing more and more.

However, depending on how bad the years of fires were, Walker acknowledged that Utah could eventually have to establish a state-funded insurance plan to help those in high-risk areas.

Protect your home from the risk of fire

The Utah Department of Forestry, Fire and State Lands has advice on what homeowners can do to reduce the risk of fire.

You can view these tips, along with explanations of how homes burn in a forest fire, by visiting their brochure here.

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