Wildfire Risk Affecting Homeowner's Insurance Rates

We were shocked to see our AMICA homeowner’s insurance recently increased by 300%! We called to inquire and were told that AMICA is now using Zesty.ai (a 3rd party company) data to assess wildfire risk and that this is the reason for the increase. We do not live adjacent to a forest or open space so we can’t understand why we are considered high risk. There is no process to inquire with Zesty to ensure their assessment is accurate or to appeal their determinations. There should be a process for the consumer to review the detailed basis for the Zesty data to ensure it is accurate and appeal if necessary. Also, there should be a process to allow the consumer to understand what specific steps they can take to mitigate risks and improve the rating.

I see this Zesty rating as analogous to a credit rating. There are laws in place that allow the consumer to view the details behind their credit rating and to appeal if applicable. Similar laws should be enacted to address this fire risk rating.

We plan to get quotes from other insurers but are concerned that Zesty is being used by many/most of them. So this is not likely resolved by simply changing insurance companies.

Anyone have any other advice?

Clark talks about homeowner insurance rates and problems on his podcast today. He suggest that you find and get quotes from an independent agent.

Watch here: Full Show: The Problem With Home Insurance and Credit Bureau Complaints - YouTube
Listen here: 07.19.23 Homeowners Insurance Reset / Credit Bureau Complaints and Your Good Name

Hope this helps! :green_heart:

This kind of thing is rampant here in California, even for houses that are seemingly far away from wildfire risk areas. I live in a high risk area with a volunteer fire department and no hydrants [since it’s in a rural area]. Amica and others won’t insure me based simply on zip code. Many other people have been forced to purchase insurance through the state of CA because no insurer would quote them. I believe the state insurance only covers fire damage. I have State Farm insurance but am afraid to claim against it because State Farm is said to not be writing new policies in CA.

In my case, I have two insurance policies and an umbrella policy on my house and property.

The homeowners, in addition to the regular coverage also includes coverage in case of lava. My lava zone is a 3 out of 5. A zone 1 requires Lloyds of London if you want coverage and they were recently sued by the state for failure to pay after a lava flow took houses. Recently we had a lava flow that went exactly the opposite direction from my house; otherwise I may have had as short as 3 hours to evacuate. We often have lava flows but on the other side of our large island. My rates have not gone up to my knowledge.

The umbrella policy is required by my lessor because I have workers aand visitors to the farm and the policy is for $1,000,000. That is new last year but I don’t think that one increased yet.

The final policy is a hurricane policy. Note that we just this week had a hurricane downgrade to tropical storm that passed my location within a couple hundred miles. My side of the island has not had a hurricane hit in recorded history. Since it is a relatively cheap policy, I have it anyway as it is replacement value. That policy just increased 10%, but is still quite affordable. They mentioned in the letetr that they have not had an increase lately and blame the increase on a general increase in hurricanes elsewhere. You might note that one of our islands had a massive Category 4 hurricane hit Sept 11, 1994 causing 3.1 billion dollar damage. It topped out at 145 mph wind. Part off the hurricane was filmed by Spielberg as his crew was on its last day of filming Jurassic Park on Kauai.

I can understand increases in insurance policies due to climate issues and events, but I would be calling the insurance commissioner in your state about a 300% increase. It must have been approved by them. Some companys may have kept a low rate longer than they should have. They may have jacked the rate just so people would not accept the change and not get that coverage.

Here our Insurance Commissioner publishes comparisons between policies of each company licensed in the state. They list it as " The Hawaii Insurance Division of the Department of Commerce and Consumer Affairs provides this sample premium comparison of licensed insurance companies …
23 pages". Look for a similar listing for your state. Perhaps it will show you a better choice of insurers who are cheaper.

I would obtain quotes from all reputable sources you can. Don’t mention anything about Zesty, your rates or discuss anything about risks. Answer only the questions they may have honestly and leave it at that.

Another occurrence that impacts home insurance rates are the increased population relocating into a zone/zip code in relation to the number of full time firehouse staff, firetrucks to service the area and even the amount of water those firetrucks can hold allocated to the zone/area. Recently, a small nearby town grew by upwards of30-40% over a 12mos period but the number of firehouses to service the area remained the same. Homeowners who have lived there for decades saw a nearly 200% jump in their HI premiums and were told the limited number of responders, number of trucks needed to support the same area and number of firehouses to service the area was now inadequate. It would seem that with the migration of the CA residents away from these high risk areas that insurance companies now have more local resources to serve the same areas (if that indeed remained a constant). Something to consider among insurance algorithms anyway.

I listened to that podcast. It does cover the topic. However, I would really like Clark to comment directly on Zesty.

I see this Zesty rating as analogous to a credit rating. There are laws in place that allow the consumer to view the details behind their credit rating and to appeal if applicable. No such laws exist for this Zesty rating and there is no process to allow the consumer to inquire with Zesty to ensure their assessment is accurate or to appeal their determinations.

Thank you,

Bend, OR

What are you basing this fear on?

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I have a ton of questions/concerns around that. Is their model accurate given that it claims to factor in a bunch of VERY complex criteria and sub-systems? If not, any amount of data still results in junk. How much data do they really have and is it sufficient to feed the model? Do they understand exactly how their system works? That one is a trick question - it is an ML system so, no, they don’t know how it works (this is one of my big concerns with seemingly everything moving to ML).

CA implemented increased protections on Aug. 23 in the FAIR plan. It is my understanding that this is a hardship plan that only covers wildfire and you’d need a homeowner’s policy alongside it for other issues.