Securing commercial or personal insurance in high-hazard areas, particularly with the increasing frequency and severity of wildfires, can be challenging. There are, however, steps you can take as a company to improve your chances of obtaining fire insurance, mitigating risks, and keeping your insurance premiums manageable:
1. Assess and Improve Fire Mitigation Efforts
- Fire-Resistant Materials: Ensure that your property, especially the exterior, is made from fire-resistant materials like stucco, brick, or metal.
- Clear Vegetation and Brush: Reduce the amount of flammable vegetation around your property. Maintain defensible space by clearing brush, trimming trees, and removing dead vegetation.
- Firebreaks: Create or maintain firebreaks to prevent fires from spreading to your building.
- Sprinkler Systems & Fire Safety Equipment: Install fire sprinklers, fire alarms, and fire extinguishers throughout the property. Consider upgrading your sprinkler system to meet higher fire safety standards.
- Fire-Resistant Roofing and Windows: Replace wooden shingles with fire-resistant materials like tile or metal and consider installing tempered glass windows.
2. Engage a Risk Assessment Specialist or Specialized Broker
Many agents, consultants, and insurers will suggest or even require a thorough risk assessment of your property. Work with professionals who specialize in fire risk assessment to identify vulnerabilities and take preventive measures.
- Insurance Brokers with Expertise in Property/Fire Coverage: Engage with an insurance broker who specializes in wildfire and property insurance in areas with high fire risk. They will be familiar with the market and can help you navigate the process.
- Compare Different Insurers: Due to the volatility of the fire insurance market, some insurers may be more willing to offer coverage than others. An expert agent/brokers can help you compare coverage, costs, and terms.
3. Increase Community and Government Collaboration
One of your best partners in this process may be your local city, county, or state resources.
- Defensible Zones: Collaborate with local authorities to maintain defensible space around your property.
- Fire District Participation: Consider becoming involved in or contributing to local fire prevention programs, like those run by the local Fire Department or other fire management organizations.
4. Engage in Fire Prevention Education
Educating your employees and contractors about fire safety, emergency protocols, and disaster preparedness can demonstrate your commitment to reducing risks. Insurance companies may view companies with comprehensive safety protocols more favorably.
5. Consider Self-Insurance or Captive Insurance
If traditional insurance markets become too costly or difficult to navigate, your company might consider self-insurance or setting up a captive insurance company. This can provide more control over risk management and coverage, though it may require a significant financial commitment.
6. Use Technology for Risk Monitoring
Many insurance providers are incorporating technology (such as wildfire risk modeling and temperature rise monitoring tools) to assess properties. You can use this technology to monitor fire risk in real time and take proactive steps to reduce your exposure.
7. Ensure Comprehensive Coverage
Ensure that your insurance covers not only the direct damages from fires but also the potential costs of business interruption, cleanup, and restoration. Given the rising costs of rebuilding after fires, you may need to increase your coverage limits to ensure that your property can be fully rebuilt if needed.
8. Prepare for Higher Premiums and Deductibles
In some cases, even after mitigation measures, insurance companies may charge higher premiums or impose higher deductibles for fire insurance in high-risk areas. Be prepared to discuss how the actions you’ve taken to reduce risk might help lower the overall cost of premiums.
Those individuals and businesses that prioritize “risk management” and proactively work with specialists like the consultants at Swarts Manning will not be spared pain from the challenges ahead. But by focusing on fire mitigation, working with specialists, and demonstrating your commitment to reducing risks, your household or company will improve its chances of securing quality insurance and keeping premium payments manageable.