FIRING UP THE HOMEOWNERS

Last week was Wildfire Resilience Week—a series of events, hosted by the Whitebark Institute and in partnership with Mono and Inyo County to help cultivate community-mindedness toward wildfire resilience reduction strategies.

On June 7 at Mammoth Lakes Library, Yana Valachovic, County Director and Forest Advisor for the University of California Cooperative Extension in Humboldt and Del Norte Counties, virtually led a well-attended “Lunch and Learn” on California’s evolving landscape—literally, and figuratively—in relation to wildfires and the insurance they mandate.

And so, Valachovic started at the beginning.

The FAIR Plan, established in 1968 and explained by Valachovic, was created as a plan of “last resort” for Californians unable to secure insurance through the regular market. 

“It’s an association of admitted or proven insurers to conduct business in California where the costs are distributed among the carriers,” said Valachovic, noting that in many other states, that cost burden is borne, instead, by consumers. “So, the liability is borne by those [California] insurance companies themselves.” 

Notably, the FAIR Plan exclusively provides fire insurance. And while it can be supplemented with  Difference in Conditions (DIC) expanded coverage for such things as theft and water damage, the growth in exposure and liability due to increasing wildfire seasons has put pressure on the FAIR Plan.

“California is the largest homeowners’ insurance market in the nation,” noted Valachovic. “The 2017-2018 wildfire sequence caused major disruption in many of our lives and the insurance industry,” she explained. Over the past decade, California has witnessed the loss of 43,000 structures—a statistic that has raised concerns about the sustainability and effectiveness of current policy.

According to Valachovic, those years and the wildfire events they witnessed were a “wake up call” in the insurance sector, in that they created enhanced concern for climate related changes and their impacts on the market.

“One thing to keep in mind is that insurers in California are part of a national and global network,” said Valchovic. “They’re supported by international re-insurers.”

The point being, challenges posed by wildfires in California are part of a broader, global issue. The rise in wildfire-related losses has had a ripple effect, and, says Valachovic, points to the need for enhanced mitigation strategies and the reevaluation of safe investment locations from an insurance perspective.

Insurers, then, have made demands to counteract the rising costs of reinsurance.

But, says Valachovic, those efforts are ballasted by Proposition 103—a policy passed in 1988 with the intent of providing consumer protection and rate stabilization for auto and property insurance. It established the position of the California Insurance Commissioner, currently held by Ricardo Lara, and set the regulatory landscape for the insurance market. 

“Proposition 103 [passed in 1988] gave the Insurance Commissioner the ability to improve rates for property insurance and create a level playing field for insurers in California,” Valachovic explained. “Insurers are passing rate increases on to consumers, but the Insurance Commissioner regulates that rate increase process.”

Valachovic noted that the Insurance Commissioner has begun to address these issues by allowing the use of catastrophe models and working on an accelerated rate filing approval process. 

And then there’s the boon of The Safer from Wildfires Program, established in 2022, which provides insurance discounts for homeowners who implement wildfire mitigation measures. 

“The Insurance Commissioner has identified actions such as using ember and fire-resistant vents and maintaining defensible space within the first five feet of structures as important for receiving discounts,” said Valachovic. 

Detailing the different pathways through which wildfires can threaten homes, Valachovic emphasized the need for both defensive landscaping and structural hardening to mitigate risk to embers and radiant heat—two types of exposures requiring two methods of resilience tactics.

Embers, small burning pieces of vegetation or debris, can travel far from the main fire and ignite surrounding structures.

Radiant heat, the intense heat emitted by burning vegetation or nearby structures, can cause windows to break or combustible materials to ignite. 

“Thinking about how we create mitigations for all buildings, especially those adjacent to each other is crucial,” Valachovic emphasized. This, she says, includes using fire-resistant materials for decks, windows, and exterior walls.

 Homeowners who have already implemented these and other comparable measures may soon see discounts reflected in their insurance premiums.

And while fire reduction strategies at the individual homeowner level are paramount, the buck doesn’t stop there. Valachovic emphasized the importance of a multi-faceted approach through both property- and community-scale efforts.

“We need to think of the ways that communities are bundled together to manage their risk, and mitigate some of the hazards,” said Valachovic, pointing to such initiatives as the Firewise USA program, administered by the National Fire Protection Association (NFPA), which encourages neighbors to work together to reduce their mutually-shared wildfire risk. 

At session’s end, the webinar opened the floor to a Q&A. 

Stacey Powells-Lyster inquired about grant programs available for replacing old wood decks—an Old Mammoth architectural mainstay—with fire-safe materials. Powells-Lyster referenced state funding in the Midwest that incentivizes homeowners to build tornado shelters as a comparable initiative.

“It’s a complicated situation,” answered Valachovic. “You’re asking public dollars to improve private property value. And then you also have to deal with NEPA [National Environmental Policy Act] review. So it’s not smooth.”

That being said, affirmed Valachovic, California has historically offered block grants and allocated some state dollars to lend assistance, at the community level, toward wildfire resilience projects. She also recommended looking into programs like the California Department of Forestry and Fire Protection’s (CAL FIRE) low-cost retrofit list and the Insurance Institute for Business and Home Safety’s (IBHS) Wildfire Prepared Home program—both resources that provide guidelines and certification opportunities that can help homeowners demonstrate their commitment to wildfire mitigation.

Education, then, is the first defense against wildfire. 

Given the evolving nature of the insurance market, and the proliferation of wildfire events, Valachovic recommended homeowners proactively engage with their insurance brokers to best optimize coverage.

“It can all be a little murky. It can all be a little bit confusing,” she said. “Now is a good time to educate yourself around how, exactly, your insurance plan works.”