wildfire burn a mountainside

Wildfire Risk Score Becomes a Line Some Insurers Won’t Cross

If you own property in the West, do you know your wildfire risk score?

Television ads bombard us about knowing our credit scores, but the property-specific wildfire risk score helps influence whether you get homeowners or renters insurance and how much they will pay.

In California, to use wildfire risk scores in insurance pricing, state-licensed insurers must include them in the rate plans approved by the California Insurance Department.

Deputy commissioner Tony Cignarale told the San Francisco Chronicle the scores utilization in underwriting and pricing had grown significantly over the past five to seven years.

Under state law, if an insurer refuses to issue or renew coverage, it must give a reason, but that reason could be as general as “wildfire risk.” More and more homeowners across the West are receiving non-renewal notices.

One widely used score comes from the risk-assessment firm Verisk. FireLine scores every point on the map in 13 Western states with the main factors considered vegetation, slope, and access for emergency vehicles. 

FireLine rates each area from zero, the lowest risk to 30, highest risk, however, the scale is non-linear, so 15 does not represent the midpoint.

Other companies assessing wildfire risk include CoreLogic and RMS. Their scores look at additional factors such as distance to the nearest high-risk area for wind-blown embers, historical fires, and defensible space.

Not all companies use third-party wildfire scores, but one company that does is Mercury Insurance.

Mercury will not insure anything with a FireLine score higher than 12. If a score is below a 12, Mercury may or may not issue insurance, depending on numerous other factors, said Victor Joseph, Mercury’s chief underwriting officer, in a news report.

Some consumer advocates say the score is used too broadly and has had a dramatic impact on the insurance market. But the Personal Insurance Federation of California believes the scores represent an advancement over times when companies would deny coverage based solely on a home’s elevation.

Read more about wildfire risk scores at sfchronicle.com.