The surge in homeowners’ insurance nonrenewals across the U.S. is an alarming trend, and Pierce County, Washington, is no exception. Homeowners like LeeAnn Cooper are finding themselves caught in the crossfire of the growing wildfire risk and broader insurance market shifts. Cooper, who has a high credit score and a waterfront property with cement siding, was shocked when Progressive notified her that her policy wouldn’t be renewed due to wildfire risk—despite living on the soggy side of the state, far from the dry, fire-prone areas.
This is part of a larger pattern where insurers are increasingly reluctant to cover properties in regions they assess as vulnerable to natural disasters, particularly wildfires. While insurers’ decisions are often based on state-specific regulations, national events, such as the catastrophic wildfires in Southern California, have heightened insurers’ concerns over risk. As the U.S. grapples with rising disaster costs and more frequent severe weather events, homeowners in many states—including Washington—are feeling the pressure.
How Insurers Calculate Risk
Insurance companies use “catastrophe modeling” technology to evaluate the potential for losses from events like wildfires, hurricanes, and winter storms. A company like Verisk, which provides risk models to insurers, uses tools like FireLine, which assesses wildfire risk down to an individual property’s address. This model considers various factors, such as terrain, slope, access to roads, and fire mitigation efforts. The goal is to calculate risk and determine whether insuring a particular area remains financially viable.
According to Janet Ruiz from the Insurance Information Institute, factors like local terrain, access to emergency services, and the implementation of mitigation strategies all play a role in these assessments. However, insurers are also impacted by broader economic forces—such as inflation and the rising costs of rebuilding—making it more expensive to insure properties in disaster-prone areas.
A Nationwide Trend
Washington state, like much of the country, is experiencing higher nonrenewal rates, with 2023 seeing the highest rates since 2018. The trend is part of a broader national shift, where insurers are re-evaluating their risk exposure due to factors like rising inflation, migration to disaster-prone areas, and the increased frequency and severity of natural disasters. This is a growing challenge that’s making home insurance less accessible for many homeowners, particularly those in areas vulnerable to fires, floods, and other extreme weather events.
While no state can legally prevent an insurer from canceling a policy, lawmakers in some states are attempting to address the problem through legislation aimed at improving the affordability and availability of homeowners’ insurance. However, as companies continue to adjust their strategies based on the realities of climate change and market forces, it’s likely that this issue will persist, leaving homeowners to navigate the uncertainties of an increasingly volatile insurance landscape.
The Impact on Homeowners
For homeowners like Cooper, the implications of this shift are significant. The fear of being dropped by their insurer can create anxiety about future coverage and premiums. For some, especially those who have not experienced significant losses or major weather events, the nonrenewal feels like an unfair consequence of national trends that have little to do with their actual risk. The rise in nonrenewals reflects a broader pattern of shifting financial burdens from insurers to policyholders, and it’s a reminder of how vulnerable homeowners can be to larger economic and environmental forces.
As more areas face increasing scrutiny from insurers, residents will need to stay informed and prepared for changes to their coverage. Insurers may require more proactive mitigation efforts or adjustments to home features to maintain coverage in high-risk areas. For many, this evolving landscape will require both vigilance and adaptability.
Related topics