The catastrophe of being unable to obtain fire insurance has finally landed on my doorstep. I avoided the problem for a couple of years, but last week got the dreaded notice from my insurance company that my home owner’s insurance on my vacation home in the Sierra Nevada Mountains is being canceled because my home is in a high fire danger area. This is a bit of a problem because it leaves me without any insurance, and it also means that I can no longer sell my house because banks will not give a mortgage without insurance. Perhaps the best solution for me is to knock down my house and sell the bare ground. If I can’t insure the house I need to knock it down because I can’t accept the risk of having an uninsured property, and it looks like I can’t sell it – so the value not only went to zero, but about $100,000 below zero to remove the risk. Opps – there goes another $500,000 of my “retirement” fund.

This house is a problem because it is located in a rural community in the Sierra Nevada Mountains – which just happens to be in a forested area just like all of the northern Sierras. I have trees on my property, my neighbors have trees on their property which makes it a fire prone area. There is a risk of a forest fire – hence no more insurance. The community has a very responsive and well staffed fire department, enforces strict “fire safe” property management requirements to keep the ground clear and tree limbs at least 20 feet from the ground. The fire department makes frequent inspections to ensure fire safety and a defensible zone around homes – vigorously enforcing their rules and regulations. This is a very different situation from the practices of communities that burned during forest fires during the past few years. Sure there is a risk of a fire loss, but that is the point of insurance – to “share” individual risks across a large group of people.

After the initial shock of being denied insurance died down I looked around for alternatives. I found a company from another state that is willing to sell me homeowners insurance, without forest fires being included. That is a bit of a relief, perhaps I don’t have to knock the house down – I just need to accept the risk of losing the house from a wild fire. That might be a workable solution for awhile since I own the house outright and don’t have a mortgage or a bank to deal with. However, it will likely mean that the house remains unsalable (or at least, much decreased in value) because it is unlikely for a future buyer to obtain a mortgage.

It turns out that a group of insurance companies created an alternative “last resort” avenue for getting fire insurance called “Fair Access to Insurance Requirements (FAIR)” plans. The intent was to create a market for those of us that have been pushed out the insurance market and therefore face losing the value of our homes. Unfortunately, one of the requirements for eligibility for the FAIR plan is more than 50% occupancy. Since this is a summer home that isn’t practical for me. I am not positive what 50% entails, but if it means 1/2 of 365 days a year that means I am not eligible.

This is a problem that has been a concerned for some time – I suppose I should have sold my place as soon as it became evident that insurance companies are attempting to back away from the risks. I sort of understand their position – they are in the business of changing as much as they can and paying out as little as they can. Wildfires clearly are a significant, growing, risk now that we are more deeply entering into a era of global warming. Hotter weather, longer summers, less rain all contribute to added risk. Add the impacts from the past 80 years of extremely poor forest management practices by lumber companies and the fire departments and you get an extremely dangerous situation. During that period of time the forests in California have been transformed into extremely dangerous fire risks because of the practice of putting out all fires as soon as possible, coupled with clear cutting vast swaths of forests that are then planted with too many trees crowded too close together so that there are few natural fire breaks and the extreme underbrush ignites fires high in the tree canopy allowing fires to race through hundreds of thousands of acres of forest. It is not like the old days where there was a mix of plant species, trees were naturally spaced much further apart and the natives actively managed the forests to minimize fire danger while maximizing the productivity of the ecosystem (not in terms of board feet of lumber, but instead in terms of a healthy and useful environment).

So we are now to the point where decades of poor forest management practices have increased fire risks to the point where it is impacted home owners such as myself. I suppose there is something to be said for the idea that I (and my neighbors) have structures in areas that shouldn’t be built upon – it should all be left “natural” and open land. I almost agree with that idea, but once we have been allowed (encouraged) to build in these areas it is a little late to change course.

I don’t know of a good solution to this problem – I just know that it is certainly an uncomfortable turn of events. I would rather not lose a significant part of my planning for my “old age” because of what appears to be an imaged level of extreme fire risk. Maybe it will just turn out that the only ones that can afford to enjoy vacation homes in the mountains are those that can pay cash and afford to lose it should a wild fire burn their home to the ground. Perhaps that is fair.