Homeowner insurance is getting tougher in the Gorge

Michael Cousins, brand director, Mutual of Enumclaw Insurance Company, said insurance carriers typically set prices according to each risk.

“Insurance premiums cover operational expenses, claims, and add to their Policyholder Surplus — essentially a reserve fund for extraordinary circumstances, like a big wildfire or an unusually harsh or windy winter,” Cousins said.

These rates are regulated by the state’s insurance commission and cannot be increased without approval from said commission. Cousins recommended clients work with local agencies who are able to evaluate the insurance landscape as neutral partners. In addition, local agents have an interest in the vitality of the communities they serve.

Jon Davies, CIC partner, Columbia River Insurance, said there are many factors that go into the cost of insurance, and depending on the company, they have algorithms that will bring in different rating variables for each account. “For homeowner insurance two important factors are, where is the house location and when was it built. Newer houses that are not near wildfire risk areas get better rates.”

"In the past, insurance companies relied on the rating of the local fire department to determine the fire risk. Nowadays, they have added the use of wildfire overlay zones to identify high risk areas,” he said. “Those maps typically use satellite images, brush or tree density, and land slope, to assess a property exposure to wildfire."

According to these maps there are areas in the Gorge that have a high probability of a catastrophic wildfire. “This is the state of the industry today — is that insurance companies are scared. ‘They don’t want to be the next Camp or Paradise fires [California]’ … one of these fires where it just flattens the entire town. So… in an effort to avoid that, they’re twisting the screws, and restricting what they are willing to insure,” Davies said.

For those who have been dropped from their insurance company and now struggle with getting their home insured, Davies said there are options. “You have to remember that each company has a different appetite,” he said. “Just because you got declined with one company doesn’t mean you’re going to get declined with another.”

An insurance company will not only consider the fire map location score of a home, but also personal rating items such as marriage, credit rating, additional policies, and past insurance claim history. “For those living in high-risk areas, it’s important to keep your property in good condition and the premiums paid up. You don’t want to give the company any reason to consider canceling the policy,” said Davies.

“The insurance company’s obligation to the policyholder, is that they can only cancel you at renewal with appropriate notice. The amount of advance warning depends on the state, but it’s typically at least 30 days. They can’t just cancel you tomorrow. They have to give you notice, and they have to tell you the reason why,” Davies said. For those homeowners who cannot find any alternative, each state has a FAIR plan where you can buy limited coverage. It’s only used if you have exhausted all options.

Having been in the insurance business for nearly 20 years, Davies said this is the most challenging environment he’s seen for the industry and homeowners. During COVID, things slowed down, and companies didn’t increase their rates.

"Then came inflation and increased building costs escalated which meant that the companies were underpriced relative to the risk.” Davies said the disappointing thing about this is that the increase in pricing and the tightening of underwriting requirements are really catchup costs from years of lagging rates.

Dean Dollarhide, The Dalles, a captive agent who represents State Farm, said due to rural housing, there is a possibility a home lies outside the boundaries of local fire support.

“There are boundaries in The Dalles that if you live outside that boundary, you don’t have the same rights or coverages and protection as people in the city limits,” he said. “If you live outside the border, then yes, you need to know what coverages you have, what is already being paid …”

Dollarhide suggested homeowners unsure of the boundary should start with the local fire department and then the state fire marshal. When he goes out to survey farms and ranches, he takes pictures of the defensible space. His goal is to make sure it’s a good risk versus a home with trees and shrubs all around it. 

“You know the evergreens right up next to the house; you look for all those combustible things that are right around the house. It’s nice to have pretty landscaping, but it’s much nicer to have your house after a fire goes through,” said Dollarhide. He is also checking the overall condition of the home, including the roof or paint, maintenance items the homeowners must do.

Insurance is designed to replace what you lost — the cost to rebuild your home, not what you would sell your home for. A separate barn or outbuilding should be insured separately from your home for loss. Dollarhide says he used to consider $150 the cost per square foot for an average home, but now, it is double or more for custom. The costs have all increased significantly.

Dollarhide has a litmus test: “If I show up with a check for your structure, are you going to hug me or punch me?” If it’s the latter, you’ll need to think about getting more coverage. There are tools to help determine the accurate home value for insurance purposes, he said, but he recommends discussing it with a local contractor who can quickly determine what an average square foot is for your home in your neighborhood. The value is important. The insurance company will only give you replacement cost to rebuild for what you are insured for.

Also important: To have a local agent. Both Dollarhide and Davies like helping people and value the personal relationships with the community members they serve.

“The 800 number doesn’t coach your kid’s soccer team, the 800 number doesn’t donate to the local Lions," said Dollarhide. “I insure a lot of people in this area, I go out to eat in this area, I go to the grocery store, I buy gas, I live in this area. If I’m not doing the right thing by people, then I’m out there for them to tell me about it. I want to have a personal reputation in this community.”