PRESCOTT, AZ — Homeowners in northern Arizona are being dropped or not renewed by their insurance companies partly due to wildfire risk. It’s a growing trend we’re seeing across the country.
“It’s challenging. You know, I want safety for my family, safety for my home,” said a Prescott Valley homeowner who wanted to go by the name of Paul.
Paul told ABC15 he’s owned his home in northern Arizona for four years. On Monday, he was told his insurance dropped him and it was mid-policy. While that specific company he worked with did not tell him why, he’s had issues in the past with companies not renewing him and telling him it’s because of wildfire risks.
“We’ve never had any evacuation zones, absolutely nothing,” Paul said.
Now, Paul has to find a company to insure his home, and his insurance agent tells him it will cost even more.
“I only pay $700 a year right now with the current policy. And I've been told I am going to probably expect a $3,000 to $4,000 a year policy, which is absurd,” he said.
Todd Sakowicz, who has a home in the Valley as well as in Groom Creek, tells ABC15 he’s had issues with companies before not wanting to renew his policy, too.
Sakowicz’s home in Groom Creek was a few miles away from a fire last year, and he was told to get ready to evacuate.
“We've had a couple of those close calls where you're, you know, I'm getting on the web, and I'm watching the Forest Service fire maps every few hours to see what direction the wind's going,” he said.
A smaller insurance company he went through decided to not renew him over the summer, so he had to look for a new company. He tells ABC15 he’s been through this before.
“It took a couple of days where you'd call a number of companies and some right off the bat would tell you based upon your ZIP code, ‘Adios, no,’” he said.
Caleb Chunglo, an insurance agent in the Prescott area, says more companies are pulling out of Arizona. While there are many factors as to why, a large one, he said, is because of wildfire risk.
“The reality is it's so expensive to rebuild a home these days because the cost, materials, labor, everything that you have to factor in when you're, you know, when a house is completely burnt down, you know, in these areas it costs so much more money to rebuild homes,” Chunglo explained.
Earlier this year, State Farm said it would not receive any new applications for property insurance because of the “historic increases in construction costs outpacing inflation, rapidly growing catastrophe exposure and a challenging reinsurance market.” In a statement in May, the company said it felt necessary to take those actions to “improve the company’s financial strength.”
“Once they dropped it in California, a few months later, they decided to start dropping the high-risk areas in Arizona,” Chunglo said.
Chunglo said insurance companies use a program to take a look at fire risk, too. He said he feels for homeowners who are impacted, feeling as an insurance agent, their hands are also tied.
“Everything just got real sticky and hard. Beginning of this year, when inflation really took off, that's the big driver of all of this,” he said.
Unfortunately, that also means policies are going up.
Paul said he’s been trying to find another company that would insure his home but many he’s reached out won’t insure him. If he doesn’t find another insurance company, he may have to go through his mortgage.
“That flexibility that those companies are showing that they have is extremely scary because, in an instant, you might be able to go from affording your home to being priced out,” Paul said.
ABC15 reached out to several of the large insurance companies for comment, specifically on insurance in Arizona, but has not heard back.
The Arizona Department of Insurance and Financial Institutions said it has heard of insurers not renewing homeowner policies in different parts of the state, adding that it is not uncommon and possibly results from an insurer wanting to decrease the company’s risk exposure:
DIFI's concern always involves whether consumers have choices. We don't like hearing about insurers leaving a certain market, but if consumers have options, their insurance needs can be met. DIFI monitors these markets and is generally aware of areas that are currently problematic for homeowners. It's also important to fully understand the scope of the issue; is this happening to many homeowners or to a few from one insurer? Again, there are many companies who offer coverage in Arizona and, while inconvenient for those homeowners who can no longer do business with their current company, we're hopeful other insurers are available to fill the gap.
