‘They’re Not Thinking About Wildfires.’ Second-Home Buyers in the North American West Need to Prioritize More Than the Views.

In Colorado’s affluent ski towns, insurance is becoming increasingly difficult to secure-a worry for brokers who lament a lack of public awareness. Getty Images

Affluent home buyers who’ve descended on second-home havens in the North American West, from Colorado to British Columbia, often prioritize perks like views and amenities—but increasingly, they’ll also need to weigh the daunting task of protecting their home against wildfires.

As climate change brings more frequent heatwaves and longer, drier summers to many parts of the world, wildfires are becoming more widespread, burning nearly twice as much tree cover today as they did 20 years ago, according to data from the Washington D.C.-based World Resources Institute.

In California, seasonal blazes have become so common that many major home insurance companies will no longer provide coverage for homes deemed to be high risk. Some homeowners are left with only one option: the California FAIR Plan, or “the insurance of last resort,” said Janet Ruiz, director of strategic communication at Insurance Information Institute, an industry association that aims to improve public understanding of what insurance does and how it works. The California FAIR Plan provides fire insurance for high-risk properties.

But even in Colorado’s affluent ski towns, insurance is becoming increasingly difficult to secure—a worry for brokers who lament a lack of public awareness.

“It hasn’t really set in to our customer base yet when they come here that insurance could be a challenge and is likely to be a greater and greater challenge over time,” said Stewart Seeligson, managing partner at the Agency Telluride.

“My market is people buying second homes, so they’re not thinking about wildfires. Their attention is more focused on views and ski access,” he added. “I think that it’s going to change, because, for example, if you buy a house in our ski resort and it has a wood shingled roof, you cannot get insurance. Insurance companies have been waiting until a property sells, and then they don’t renew the policy.”

As well as requiring that wooden roofs be replaced with metal, which can cost up to $150,000 or $200,000 for a luxury property, many insurance companies in Colorado have recently implemented a requirement that qualify for coverage, homes must be located within 10 miles of a fire station. The only alternative is to install a cistern that holds two gallons of water for every square foot of the property. These are restrictions of which many buyers remain unaware, Seeligson said.

Lack of access to insurance can derail a purchase entirely.

“Home insurance is typically essential for financing. In most incidents, you will not be able to close without insurance,” said Alexandra Axsen, managing partner at the Agency Kelowna in British Columbia, Canada. “Being in a wildfire prone area, I always add a force majeure clause into all of my contracts, which allows for a delay in closing if there is an active burning fire.”

Know the Risk

So, for buyers thinking of investing in a home in an area prone to wildfires, what does due diligence look like? And what should homeowners in these regions be doing to protect their homes, both financially and physically?

“It’s important to actually start before you purchase property,” Ruiz said. Buyers should begin by researching the area, taking into account the risks posed by factors such as topography and wind patterns, as well as the region’s history of fires and its firefighting infrastructure, she said, citing the Wildfire Prepared Home Program and the Insurance Information Institute’s resilience website as good sources of information.

Before making an offer on a property, qualifying for home insurance should be a primary consideration. Buyers purchasing a luxury home should take out the most comprehensive coverage available to them.

“When you’re looking at a high-end home you want to be sure that you buy enough insurance to be able to rebuild your home and replace all your belongings,” Ruiz said. “That may sound very basic, but sometimes the amount you’re paying for a home at purchase is different from the amount it would cost to rebuild a home of like kind and quality and up to current building codes.”

Once a homeowner has secured insurance, it’s important not to let it lapse.

“Make sure you know exactly when your insurance policy expires, and renew it well in advance of the expiry date,” Axsen said. “You do not want your insurance to expire in the middle of a fire. You are able to renew your policy during an active fire, but if it expires you will not be able to take out a new policy.”

Options Beyond Insurance 

Financial protection is important, but homeowners should also take physical steps to mitigate the risk of fire damage. Some insurance companies will subcontract wildfire experts to help identify areas of weakness and ensure they are eliminated. In Colorado, homeowners “will send a drone to go above the home and take photographs and send it to the insurance company so the insurance company can better assess the fire mitigation that the homeowner has put in place,” Seeligson said.

In other areas, “the companies that work on mitigation will come out and do inspections,” Ruiz said. “Oftentimes, they can either help you find contractors or landscapers to do the work, and then they can come back and reinspect to make sure it’s all done correctly. These are the types of things that make a huge difference.”

Key mitigation strategies include fire-proofing or replacing potentially flammable roofs, siding and decking, and checking vents and other potential points of entry to ensure that flying embers can’t penetrate the interior of the property. Homeowners should also invest in fire-resistant landscaping and consider installing fire-resistant window treatments, smoke detectors, fire extinguishers and devices such as sprinkler systems and air-filtration systems.

“Research has shown that a house with both a fire-resistant roof and a safe zone—all combustible materials cleared around the house—is 85% more likely to survive a wildfire,” Axsen said. “Add a roof sprinkler system and you are increasing that percentage even more.”

Removing or delimbing trees growing close to the home and regularly removing flammable materials such as leaves and pine needles from roofs, gutters and foundations is key, she said, as is keeping lawns cut short and watered.

Homeowners should pay particular attention to what’s known as the “zero zone”, Ruiz said. “The first zero to five feet around a home should all be wildfire resistant, and then you clear the land and have the right landscaping 30 to 100 feet out as well. These are all things that are proven now to keep homes from burning.”

Sprinkler systems are “not as expensive as you think,” Axsen said. A basic self-install system that attaches to the gutters and connects to garden hoses can be purchased in Axen’s area of British Columbia for as little as C$110 (US$80). “It is also a good idea to invest in a HEPA air purifier,” she said. “Air purifiers not only remove the smoke odor, they also capture many of the harmful chemical components. Household air purifiers start around C$100, while commercial grade air purifiers start around C$1,000.”

For homeowners who have a pool or live close to a large body of water, a generator can also be a worthwhile investment. “An owner’s luxury lakefront mansion was in the direct path of a wildfire last month,” Axsen said. “He got a generator and stood in the lake pumping water from the lake onto his house. His house survived. The houses on either side of him burned to the ground.”

Should a fire break out, some insurance companies contract specialist private fire crews to visit at-risk homes, clear any debris or hazardous materials from the roof, gutters and perimeter and spray the property with foam, gel or other fire retardants. But owners of ultra-prime properties might want to consider more extreme precautions, such as directly contracting private firefighting companies to physically battle wildfires.

There have been accusations that some unregulated private companies have complicated or disrupted the work of public firefighting services in California in recent years, but reputable companies—whether spraying homes with fire retardants and turning on sprinklers ahead of a fire, or actively fighting the flames—“are in tune with the public fire services and follow their rules and their direction.” Ruiz said. “It’s becoming more acceptable to the fire services as the companies that provide these services are more willing to go and check in with the incident commander.”

The Upside of Fireproofing

As wildfires become more common, the housing market is slowly adapting. In Telluride, Colorado, “I have some clients who think that they want to sell in the next two to five years where they are going ahead right now and putting on their metal roofs to make the sales easier in the future,” Seeligson said.

And as mitigation strategies become more widespread, “I think we’re going to start seeing folks get certifications on their homes before they try to sell them,” Ruiz said. “I think it’ll be a combination of both parties, the buyers and the sellers, looking to have those certifications in place.”

In the meantime, homeowners may need to invest increasing time and money in ensuring their properties are protected—but they also have an increasing number of resources to fall back on.

“While we used to talk more about prepare and recovery, now we’re also talking about predict and prevent,” Ruiz said. “The risk modeling companies are starting to make more information available so that people can really understand where they’re buying and make better choices. … There’s no reason not to protect your home. The knowledge is there. There are people who can help you.”

Via Mansion Global