Although the last few fires burned most of the mountains spilling into the Santa Barbara area, I am told there is still plenty of fuel for new fires. As fire season continues, what is the extent of the danger?
One major insurer has defined it by refusing to write new fire insurance in the 93108, 93103 and 93105 ZIP codes. Several years ago, another major insurer refused to write any new fire insurance in the state.
As fire insurance is a requirement of any home loan, the lack of competition can add an another burden for a buyer.
For those with homes at risk, it’s time to review your policies.
A local insurance broker pointed out that many policies will only provide full replacement cost if the property is insured “to value.” In other words, the amount of insurance must equal all or a large percentage of the cost to rebuild. If not adequately insured, the policy will default to a formula that only insures for the “depreciated” (actual cash) value of the improvements, not the full replacement cost.
The catch here is that after a major fire, construction costs tend to rise dramatically. This new, increased cost to replace your home could wind up defeating your full replacement coverage, leaving you on the hook for a substantial amount of the cost to rebuild.
The best thing to do is read your policy before a fire happens. If it’s unintelligible, visit a licensed insurance broker for a translation.
For a map of the fire and flood dangers on the South Coast of Santa Barbara, the county has a very informative map available by clicking here.
Fire safety information can be found at the State of California website by clicking here or the Santa Barbara County Fire Department website by clicking here.
Be safe!
— Ed Fuller is a real estate broker with San Roque Realty Inc. and president of the Santa Barbara Association of Realtors. Contact him at ed@sanroquerealty.com or 805.687.1551. The opinions expressed are his own.