Press Release 2006-02 The Wildfire Season Is Upon Us…Is Your Insurance Policy Ready? Insurers improve practices to enhance customers’ coverage.

NEW ADDRESS


Arizona Department of Insurance
100 North 15th Avenue, Suite 261

Phoenix, AZ  85007-2630

Starting July 1, 2020, we will be the
Department of Insurance and Financial Institutions (DIFI).

Media Contact: Erin H. Klug Public Information Officer (602) 364-3471

For Immediate Release February 17, 2006
 

The wildfire season began early in Arizona this year, and the continuous warm, dry weather produces a great potential for a severe wildfire season throughout the state.  Homes and businesses, particularly those near wooded areas, should take steps now, to prepare for the season and to prevent loss or damage.

This threat of wildfires serves as a timely reminder for Arizonans to review their homeowners and business insurance policies to ensure sufficient coverage for property and belongings in the event of loss or damage. Personal insurance is the first and primary source of wildfire disaster recovery assistance.   After the 2003

Aspen fire that destroyed the town of Summer Haven on Mt. Lemmon, the Arizona Department of Insurance (ADOI) heard from more than 70 families who discovered too late that their homeowners' insurance coverage was inadequate.  In conducting market conduct examinations of several insurance companies involved in the Aspen  fire  claims,  ADOI  discovered  insufficient  and/or  inaccurate  insurer  methodology  for  estimating appropriate  dwelling  coverage  limits  and  the  lack  of  a  meaningful  process  to  periodically  re-evaluate policyholder coverage limits.

ADOI is pleased to report that, so far, seven (7) insurers, Harford Insurance Company of the Midwest, Property & Casualty Insurance Company of Hartford, Country Mutual Insurance Company, American Family Mutual Insurance Company, Farmers Insurance Company of Arizona, Allstate Insurance Company, and Allstate Indemnity Company, signed Consent Orders to establish new policies and procedures to increase the accuracy and improve the quality of their coverage estimations for their policyholders.  In particular, these insurers agreed to: (a) issue regular, periodic inquiries to their customers to verify current construction features and/or improvements to the dwelling; and, (b) re-calculate and adjust the policy limits of insureds who respond with new information indicating structural changes that affect the replacement cost of their home.

Liberty Mutual voluntarily agreed to adopt these 'best practices' standards, USAA instituted similar ‘best practices’ many years ago, and ADOI is working with other insurers to join in these market practice improvements.  Nonetheless, even with these positive changes in insurance company practices, homeowners and  business  owners,  especially  those  in  wooded  areas,  should  get  an  insurance  check-up  and  take responsible steps to make sure their coverage is adequate.   “Given the complaints we received from homeowners who discovered their insurance coverage was inadequate, and considering ADOI’s examination findings, I strongly urge homeowners to contact their insurance company to evaluate their coverage limits, particularly in light of the dangerous fire season ahead,” said Christina Urias, Director of Insurance.

Getting an Insurance Check-Up

“An  insurance  check-up  is  simply a periodic review of your coverage,” said Urias. “An annual review of insurance coverage can help prevent problems after a loss occurs.  We recommend property owners read their policy, contact their insurance agent, or company, and set a date to review and analyze their coverage needs.” ADOI has a Homeowners Insurance Check-Up Checklist pamphlet to help you get started.  Call the ADOI at

602.364.2499,  or  800.325.2548  (outside  Phoenix)  to  request  a  copy,  or  visit  the  ADOI  website  at www.id.state.az.us, which also has a list of Home Replacement Cost Estimators, to assist you in determining the replacement cost of your home.

ADOI  suggests  you  verify  your  property’s  square  footage  and  make  sure  your  insurer  has  the  correct information on record, document the exterior appearance of your property and its contents with photographs and/or a home video tour (and store the video in a safe place, away from home!).   “An inventory of your personal belongings will help determine the appropriate level of coverage and will greatly facilitate claim settlement in the event of a loss,” said Director Urias.   There is a free, on-line home-inventory tool at http://www.knowyourstuff.org/.

Homeowners insurance usually covers the structure of your home as well as its contents - your personal belongings.  You  should  periodically  consider  property  values,  improvements  (remodeling,  additions,  etc.), and/or  significant  new  personal  property  acquisitions  (new  tools,  furniture,  appliances,  etc.),  and  get  an insurance check-up to make sure you have the coverage you need!

Home Businesses

According  to  the  Independent  Insurance  Agents  &  Brokers  of  America  (IIABA  at  www.iiaba.org),  many individuals operating a business out of their home mistakenly assume ordinary homeowners insurance covers their business property and/or equipment or, perhaps feel that their business is too small to insure. Home-based business owners should ask their agent about the benefits of a home-business endorsement to their homeowners' policy, or an in-home business policy that would afford protection for business equipment and provide coverage for financial losses and business interruptions if disaster strikes.

Flood insurance

Floods  are  more  common  in  Arizona  than  many  realize.    Although the federal government provides the coverage, licensed insurance agents sell flood insurance that covers direct physical losses from severe storms, flash floods, or mudflows. If you are concerned about the risk of flood in your area, contact your agent or insurer for more information, or visit  www.floodsmart.gov.

Fire Prevention and Preparedness

Mitigate the potential for fire damage and reduce the risk of wildfire losses by creating a defensible zone around your home and/or business in wooded areas.  Check your policy for specific requirements, or call your agent or insurer to inquire about policyholder obligations for establishing a defensible space around your home.

For fire prevention and preparedness tips, contact the Institute for Business and Home Safety (www.ibhs.org)

and the Arizona Red Cross (www.arizonaredcross.org). For more insurance tips, contact: Arizona Department of Insurance

2910 N. 44th Street, 2nd Floor

Phoenix, AZ 85018 (800) 325-2548 (602) 364-2499

[email protected] www.id.state.az.us

Consumer Resources

Insurance:

Arizona Department of Insurance,  www.id.state.az.us

National Flood Insurance Program,  www.fema.gov/nfip

Arizona Insurance Information Association, www.azinsurance.org

Insurance Information Institute, www.iii.org

Independent Insurance Agent & Brokers of America,  www.iiaba.org

 

Disaster Preparedness:

Arizona Division of Emergency Management,  www.dem.state.az.us

Arizona 2-1-1 Online, www.az211.gov

Arizona Red Cross, www.arizonaredcross.org

Institute for Business and Home Safety, www.ibhs.org

 

Period: 
2006
Priority: 
02