Colo. Homeowners Feel Disasters’ Impact On Insurance
|By Ryan Maye Handy; [email protected]|
Natural disasters, be they hail storms or wildfires, are changing the insurance landscape in
Homeowners are likely to feel the affects of the 2012 wildfire and storm season in the years ahead, just as they now are seeing the impact of past disasters, insurance officials say.
Miles from the
"Maybe it's perfectly legal for what they have written in the fine print in the contract," Meeker said in early February, days before his insurance was set to expire. "All the companies from
Like Meeker, homeowners across
As Meeker grapples with his neighborhood's new status as a "fire hazard" zone, other
"Even from the Hayman fire 10 years ago back in 2002, insurance companies started to examine wildfire risk, and seeing whether they could take it on," she said. "Insurance companies -- the trend over the past 10 years -- have been getting stricter about what properties they insure."
Whether or not homeowners like Meeker do wildfire mitigation is now a large concern for companies when people buy insurance, Walker said.
"If somebody bought it (homeowners insurance) 10 or 15 years ago, nobody would have asked that question," she added.
During the 21 years that Meeker has lived outside of Monument, he said he has never filed an insurance claim; in the six or seven years that he has been insured by American National, he has never had any damage to his house.
But following the
Last fall, American National agents came to inspect Meeker's property. They told him to create a defensible space around his home -- a 30-foot buffer between the structure and any vegetation that might catch it on fire. Meeker had firefighters from the
American National did not respond to The Gazette's request for comment.
"The American National people came up there like three times, and they said that, 'You'd be ok'," Meeker said. Firefighters told him that with the scrub oak gone the property was well mitigated. "If a fire comes through like Mountain Shadows, what they've done is good enough for the kind of fire that they'd have to fight -- a ground fire," Meeker said the firefighters told him.
But in December, the Meekers received a cancellation notice in the mail from American National: "Due to the added fire hazard presented by the density and proximity of native vegetation, your agent will assist you in determining if anything can be done to make your property insurable."
After settling hundreds of claims in Mountains Shadows and for others in the state, it is not surprising that insurance companies are raising their homeowners insurance rates and examining their clients' properties closely, said Walker. That is, after all, how homeowners insurance works, she added.
"I think the message to homeowners is -- we've seen the risk play out, the most expensive, devastating wildfire in history -- to make these communities safer," Walker said.
Insurance companies will look at individual homes as well consider entire neighborhoods. When Meeker was shopping around for new homeowners policies, he found that the lack of mitigation in his neighborhood drew agents' attention.
"The guy from
How it works
Although he recognizes that American National has every right to cancel his policy, Meeker believes that the whole process was "not quite right," he said.
It is within the rights of insurance companies to raise rates or issue non-renewal notices, said
In the eyes of firefighters and insurance companies, living in the red zone is far riskier than living in downtown
"Increases this year are not necessarily reflective of last year," Plymell explained. "There is usually a year's lag in terms of that. Any sort of changes as a result of the fires could actually be coming in a year or so. That's usually the case in terms of the industry as a whole."
Call for change
While consumers might be at the mercy of the commercial needs of insurance companies, there is some need for push-back by consumers, Walker said -- especially as the potential for flood and fire disaster in
"We have been talking to legislators. There are people pushing for some type of legislation that would address issues that emerge in diaster situations," Walker said. But movements to change insurance companies' policies must be handled carefully, Walker cautioned. "Given the current climate -- increased catastrophes, rising premiums -- we just need to be careful that we don't fundamentally change the way homeowners insurance works."
In other words, rising premiums and non-renewal notices are a natural part of the cycle, especially as homes become larger and more expensive, and require more money to repair, insure or replace, Walker said.
"We have a perfect storm situation. We're seeing rising premiums and increased volatility," she added. Walker said there is currently a "political push" to limit how companies adjust their rates.
Until this year, there has been little interest or support for insurance-related legislation in
"I am pushing hard," she said on Thursday. "I am trying to put the teeth back into it, and I think that I am gong to be able to pass it because so many people were affected."
The pool of affected homeowners -- whether they suffer damage from hail or fire -- will most likely grow, said Walker. For the past few years,
"You are seeing premiums increase to respond to those patterns and trends over time," she said. "We just have too many people living in high risk areas. It's a recipe for diaster and unfortunately we all end up paying for that in our insurance premiums."
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