California to require insurance discounts for property owners who reduce wildfire risk with tree-clearing
A recent California bill would require insurers to pay for the tree-clearing that homeowners are often willing to undertake in order to reduce wildfire risk. (Photo by David McNew/California Rural Legal Assistance via Reuters)
California is one step closer to requiring insurers to pay for the tree-clearing that homeowners are often willing to undertake in order to reduce wildfire risk.
The bill on the California Senate’s desk would direct insurers to pay for tree-clearing that “is not required to prevent, retard, mitigate or control” wildfires and reduce property value or other financial losses.
Insurers would be forced to pay for the tree-clearing as a condition of their insurers’ policies, but only if their customers can show that the work was actually necessary to reduce wildfire risk.
Some observers believe the effort could have a wide-ranging impact on property insurance policy coverage. California residents who use their homes as passive homes, where they can passively tolerate wildfire without any human intervention, currently would not be required to reduce property value or other financial losses as a condition of insurance coverage. But, the bill would make it an absolute requirement that homeowners reduce wildfire risk without using any human intervention.
This change would have a big impact on the insurance industry. While it would be relatively inexpensive to implement, it could have a major impact on insurance policy costs and reduce the profitability of insurance companies.
California is the latest state to grapple with the question of how to reduce wildfire risk through homeowners’ tree-clearing. There are now some 50 million US homes with “passive fire resistance” measures, where homeowners do not require any form of intervention when they face wildfires. But insurance companies see these measures as an opportunity to use their financial flexibility to lower policy costs when they face a loss.
Proponents of the current state law, such as its proponent California Sen. Jim Nielsen (R), argue that the program will raise California’s forest management capacity and protect homeowners’ investment in their properties, because the program rewards homeowners who make the most of their tree-related risk.