Arizona homeowner dropped by insurance company over wildfire risk

It’s something homeowners are likely going to face more often as the insurance industry deals with record losses.
Published: Jul. 25, 2023 at 11:44 AM MST
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PAYSON, AZ (3TV/CBS 5) - As several wildfires burn across Arizona, some Arizonans are losing their homeowners insurance because of the risk of wildfires in the state.

Dennis’ home in Payson has been part of his family’s story for decades. “It was pretty much all built by us--my dad, my mom and I. My mom, she’d be up on the roof putting shingles down,” he said, who asked to use only his first name for an interview with On Your Side. “It was something that took us five years of weekends and holidays to build onto the old place.”

Over the years, Dennis and his parents have had homeowners’ insurance through the same company. “We’ve had Nationwide for over 50 years,” Dennis said. Recently he received a letter from Nationwide telling him the company would not be renewing his policy due to high wildfire exposure. “It’s kind of a shock, you know?” he said. “There are trees on the property, but only a few near the house. They’re all alive and good, but no other vegetation around close. For something like that, I’d think they’d at least look at what a property looks like before they say, ‘OK, well, we’re going to drop you.’”

Nationwide told On Your Side that the company does not comment on individual policies and did not answer our questions about how many Arizona properties they’ve decided to not renew because of wildfire risk. It’s something homeowners are likely going to face more often as the insurance industry deals with record losses. “Arizona, unfortunately, does have quite a bit of wildfire exposure,” said Karen Collins from the American Property Casualty Insurance Association. “We have not heard of any companies that have pulled out of Arizona, but you may see companies enforcing stricter underwriting.”

Weeks after the Diamond Fire was put out, a neighborhood near Scottsdale is starting to clean up and getting water has been an issue.

Collins explained that wildfire mitigation may be required as part of a condition of coverage. “There may also be some companies that at a portfolio level may just be over-concentrated in certain regions, and they may be making adjustments to their overall portfolio,” she said.

According to APCIA, the U.S. home, auto, and business insurance industry has experienced record losses in the last year as inflation has pushed up the cost of rebuilding after disasters. “Insurers have been paying out more than twice as much for natural disasters in the last five years than in the previous five years.” That’s pushing up the cost of insurance companies’ reinsurance, so many of them are making changes. For example, in California, Allstate and State Farm say they will no longer write new homeowners’ policies in the state because of the risk of wildfire. This month, Farmers Insurance announced that it will be discontinuing new home and auto policies in Florida, where hurricanes are a threat.

“In the current hard market conditions that we’re experiencing, you might just need to put in a little more effort to shop around to find the companies that are able to provide the coverage,” Collins said. “There are ways that you can help reduce your cost while you’re shopping for insurance, such as talking about the discounts that might be available to you for mitigation efforts that you’ve done to harden your home to be more resilient to disasters.”

That’s what Dennis did, and he found the coverage he needed at a price he could afford. “They asked me questions about the house, and away we went,” he said.

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