Home insurance

Worsening wildfires call for closer look at home policies

Tuesday, October 31, 2017by  Jon Osterberg

fire consuming shed with fire fighterA pattern of bigger, more severe wildfires is changing how we view country living.

People in high-risk areas must cope with greater danger, and insurers are challenged to protect those homes.​

Like other insurers, PEMCO is thoroughly evaluating property at extreme risk for wildfire. Severe infernos across Washington and Oregon in recent years have prompted this closer look. Starting in 2014, we bolstered our use of predictive technology to more-accurately assess risk and update some of our criteria for gauging which homes we should insure.

We've learned that for a very small percentage of homes we insure – 0.2% – the wildfire risk is simply too high. Typically, these are homes in what's called "wildland urban interfaces" (WUIs), communities in or adjacent to forested, hilly terrain.

Aside from topography, some of those homes also have restricted access for firefighters. Picture a rural home with just one road in and out, or a long dirt driveway too twisty or narrow for a fire truck to easily pass. Perhaps the home is miles from the nearest fire station and farther still from the nearest fire hydrant.

In those cases, even when the homeowner has followed Firewise principles to protect the house (such as, it has a metal roof, fire-resistant siding, a wide buffer with no trees or brush, and other precautions), it still could be vulnerable to wildfire.

PEMCO has told those homeowners at extreme risk for wildfire that we can't insure them in the future, and that their policies will not be renewed at the annual expiration date. 

This is important to note: nonrenewal is not the same as terminating coverage mid-policy. We are not ending any coverage before those policies expire, and we're providing as much advance notice of nonrenewal as possible (well beyond the industry standard) so customers can explore other ​options. 

cabin in the forestPEMCO agonized over these decisions. We feel awful about nonrenewing loyal customers. Each decision was made on a case-by-case basis, after a thorough review of each individual property. We're working one-on-one with customers to help them find other insurers that can best serve them, making the transition as smooth as possible.

We believe being a regional company (PEMCO insures only Washington and Oregon residents) gives us many advantages. At the same time, being local also means our wildfire risk is spread across a smaller territory than national insurers that can spread their risk across the entire country.

The responsible, hard choice is to make these tough individual decisions for the benefit of all our customers. PEMCO is a mutual, meaning we're owned by our policyholders. All of our customers share the risk, and we must be fair to the entire risk pool.

Even when being fair makes us unpopular with a select, valued few.

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