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Insurance Explained

Homes, Wildfires, and What You’re Not Understanding

Before I delve into this post, let me make it clear that I offer insurance options for average, low-risk homes; all the way up to multi-million dollar homes in high risk locations.

If you want to talk about property insurance, give me a call at 303-532-3000.

My house won’t burn down if there’s a fire on those mountains!

Many of my new clients come to me because they are unable to find insurance for their home or investment property through “traditional” insurance companies. Most times, their story goes like this: “I am waiting to close escrow on a new purchase, and I can’t find anyone to insure the property. They’re all saying I’m in a wildfire area. This makes no sense whatsoever, considering I’m a few blocks from any hills/mountains/brush. My house wouldn’t catch fire if there were a fire over there. I’m too far from any areas that are at risk. Please help!”

Guess what. You’re probably right! Your property is likely not at risk of going up in flames. However, you, along with many colleagues in my industry, have made one big false assumption; and that’s knowing what the insurance companies are worried about.

Why insurance companies don’t want to insure anywhere near wildfire areas:

When an insurance company says they’re not writing business in an area they deem a high wildfire risk, it’s natural for consumers and agents to assume the concern is the exposure to a potential home fire claim. The reality is that that’s not the concern of most insurance companies. When wildfires wreak havoc on an area, homes burning to the ground typically isn’t where the bulk of claims dollars are allocated. Most payouts are paying for damage caused by smoke, ash and soot. Smoke and soot can find their way into the smallest cracks and openings in a home, leaving behind a big mess, and a smell that can be nearly impossible to get rid of. When the wind is just right, you can have homes several miles from a fire be seriously impacted with smoke damage. The result? The insurance company has to pay for smoke remediation of your property, and many of your belongings. For homes a few blocks from a wildfire, it’s very possible to have smoke damage adding up to the tens or hundreds of thousands of dollars for a single property.

What is fair?

A surprising number of people express that they feel it’s unfair for an insurance company to refuse to cover their property over something they (the client) have no control over. To which I point out that it’s the absolute fairest thing an insurance company can do. It may not be equal, but it’s fair. What would be unfair would be having people who have no chance of suffering smoke/soot damage having to share in the cost of those damages homes in riskier areas face. The entire foundation that insurance is built upon is based on keeping similar risk types together. That’s why some insurance companies focus entirely on extremely low-risk homes, while others focus on insuring the higher-risk homes. People in high-risk situations should be paying more than those in low-risk situations. Insurance has never been about equality of rates for all. It’s about trying to have the most accurate and fair rates for all.

If you own a home or investment property in a low-risk part of town, like Lone Tree, Highlands Ranch, or Centennial; or you own in the foothills of Morison or Palmer Lake, feel free to call David Harriman to discuss your insurance needs.

BMR works with insurance companies of all types, and can insure properties of all types.

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