The Great Californian Insurance Crisis

The first time I ever left my house to a job interview to get into the restoration business, my car was covered in ash from the recent wildfires in the city where I lived. After a whopping 15 wildfires had started in Southern California that month, the air was even less breathable than the smog we’re used to.

The year was 2003 and one of these fires was the largest recorded wildfire in California history, the Cedar Fire. Since 2003, the problem has literally exploded. In fact, the 8 largest California wildfires have all occurred since December 2017. 40,000 structures have been destroyed and tens of thousands more had soot and ash damage.

According to Mark Sektnan of the American Property Casualty Insurance Association, “Insurers in some cases paid out more than 4 dollars for every dollar that they took in.” In addition to taking heavy losses, insurance companies in California can be challenged legally any time they increase premiums over 7% and laws were passed in 2018 prohibiting insurance companies from non renewing policies for a time in high danger areas. And at the end of 2021, high end carrier, AIG decided to stop offering admitted insurance policies in California.

As a disaster restoration professional, I have worked closely with some of the best insurance brokers in the country and they have been forced with the burden of marketing policies with increased deductibles, sky high premiums and reduced coverage. And the number 1 question I’ve been asked is:

How can we make our homes more insurable and less disaster-prone?

This may seem like a strange question and discussion for us to be having. After all, our businesses depend on disasters on small and large scales. We obviously don’t hope that bad things happen to homes and properties, but we are in the business of dispatching to disasters. Despite these market forces, I believe that it is the responsibility of every disaster restoration professional to ask the question on every loss: Is there anything I can do to help this customer never have to go through this again (or at the very least reduce the times it happens again)?

Wildfire damage is a perfect example because it is a problem that can be inexpensively mitigated, especially if we understand where wildfire damage comes from. The Insurance Institute for Business & Home Safety (IBHS) estimates that up to 90% of wildfire ignitions are caused by embers that have blown away from the main fire. Since most of our wildfires are accompanied by heavy winds, these embers can be blown far away from where the main force of firefighters may be situated. If the homeowners are already evacuated, no one is there to call 911 and if the homeowners are there, calling 911 is not a guarantee either. Our brave firefighters can’t possibly get to all of these areas and when you drive through neighborhoods after a wildfire, it’s almost eerie to see single homes left standing on a street of 10 piles of rubble where homes once stood.

In some instances, it could be luck or a miracle but science is starting to offer real, sustainable solutions on things that home and businesses can do to nearly eliminate the chance that an ember could ignite their property. There are 2 well known remedies and one up and coming solution for homeowners (and opportunity to help for restorers).

Step 1: Hardening the Structure

Do you remember the story about the 3 little pigs? The big bad wolf was coming and the first two pigs had hired unlicensed handymen (pardon the editorial commentary) to build them a house of straw and sticks respectively. The big bad wolf blew their homes down and they were declared total losses. The third pig hired a fair and honest contractor who received overhead and profit and built a beautiful home of brick that the wolf was powerless against.

Like our porky friends, we too should be careful to build structures in High Severity Fire Zones out of non-combustible materials. We can educate our clients about ember safe vents and gutters. We can offer to enclose wooden eaves. We should look at a home and ask ourselves, “what vulnerabilities exist here?” and offer ideas to correct them. My restoration company has increased the amount of self-funded work every single year for the last 5 years in the name of improving and protecting the homes of our clients.

Step 2: Vegetation Management

The second most important area that is vulnerable is the vegetation around our homes. My company specializes in working on high end estates in areas like Beverly Hills and Bel Air. In addition to the luxury of the homes themselves, the grounds tend to rival that of a European castle. Many landscape designers are focused on presenting an aesthetic over something that may be less flammable and more safe and as a result, many homes have burned due to dry palm or Italian Cypress trees (side note: these trees love fire as much as any Pyromaniac ever did).

The closer to the home we find dryer vegetation, the more urgent it is to reduce or eliminate the vegetation. Areas like dry brush under wood decks or bushes or mulch around the perimeter of a home are perfect areas for an ember to land and cause the entire home to be engulfed in a matter of minutes. Our company trains our affiliates that do this work to make sure that you enlist the help of a Forester to help decide which trees and vegetation are dangerous in the face of a wildfire.

Step 3: Long Term Retardant Application

The challenge with vegetation management is that most clients do not want to get rid of all their dangerous vegetation. They planted trees and gardens to look and feel a certain way and they don’t always want to trim or remove them. Moreover, they may want wood around their property as opposed to non-flammable, non-organic products.

This is where Long Term Retardant (LTR) is a game changer. Most of us who live in wildfire areas are familiar with the crimson red LTRs being dropped from airplanes during a wildfire. The product most commonly used by CalFire is Phos-Chek which is the only Long Term Retardant that the Forestry has given full Qualified Product List status to. This product when sprayed properly changes whatever it is on to be inflammable. It lasts for up to 1” of rainfall (most peak fire seasons do not see more than this). It can be applied to all remaining vegetation and is a complete game changer for Disaster Prevention and Restoration companies that want to protect their clients.

Recently, one of our celebrity clients (I’d say who, but my friend Paul McCartney told me never to name drop) was threatened to be non-renewed by his carrier and asked us to come out to do what we could to make his home safe. This celebrity had installed Redwood trees in the front of his home that felt distinctly Californian and provided a large amount of much needed privacy from nosy tourists who drive by his home hoping to catch a peek of him. The decision to plant Redwoods made sense but these non-native trees do not get the humidity from the air they evolved to receive in their native areas closer to the Oregon border. Getting rid of these trees was not an option the client was willing to consider. In lieu of this, he allowed some of the branches to be cut back and for long term retardant to be sprayed on the lower branches to protect the home.

Disaster Prevention is more than a nice service for restoration companies to offer. Not only have we found it an amazing way to build a stronger relationship with our clients, it has been an amazing source of revenue for our company. We’ve been able to change our relationship with the insurance companies to be there both before and after fire damage occurs. We’ve established ourselves with our high end clients to be a resource and an expert who is concerned with saving their homes. 

Despite only being in Southern California, we’ve also started training affiliate partners who are doing work for us in Central and Northern California and we have plans to extend our affiliate program into other wildfire areas starting later this year. Every year, over $2 billion is spent on wildfire prevention and mitigation and companies are ramping up to assist with prevention before and restoration after to help with this growing emergency.

I hope that all restorers will join us in making the properties of our clients safer and more disaster-proof. It’s been one of the best opportunities we’ve found as a restorer to broaden our relationship with both our clients and our referral sources and as residents of the state, it makes a ton of sense to protect the homes around us.

Tim Bauer

Tim Bauer started working in Disaster Restoration 20 years ago and serves as Senior Vice President for the Private Client division of Allied Restoration. He also is a cofounder of Restoration Mastery which teaches and educates restoration companies. Tim has conducted trainings and contributed thought leadership on disaster restoration marketing, recruiting, sales and many other subjects and is a three time TEDx Speaker.

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