‘Outrageous’: Insurance companies using risk of wildfires to drop Spokane-area homeowners

A month ago, a letter delivered a blast of uncertainty for Marvin Lindberg. It notified him that his home in Spokane County had become uninsurable.

After about three decades of paying premiums to Farmers Insurance, Lindberg and his wife learned that the company’s “proprietary catastrophe model” determined that the retirement home Lindberg and his wife built in 2006 fell within the “highest 1.1% of risks.”

“This level of risk is ineligible for coverage with us,” the letter states, informing the couple that their policy would end on October 30. “Thank you for allowing us the opportunity to provide you with insurance.”

Lindberg, 78, said he didn’t feel very thankful.

“Greed is not a sustainable business model,” Lindberg said, noting that Farmers was more than willing to continue insuring his car and other things. “They are cherry-picking risk.”

The retired Ford and Boeing engineer said he’s learned in life that persuasion can be achieved by reinforcement or a threat.

“It’s best to do something with a carrot. But if you can’t, a sledgehammer is quite motivational,” Lindberg said. “The whole business of insurance is risk. If a company chooses to pick products where they don’t have any risk, it seems to me that does not qualify as an insurance company.”

Lindberg took his concerns Wednesday evening to a town hall in Spokane hosted by Washington state Insurance Commissioner Patty Kuderer.

“Well, I would say it’s not acceptable,” Kuderer said of Lindberg’s nonrenewal. “I mean, this is part of the problem that we’re talking about.”

Kuderer earlier noted that her office had been tracking reports of other homeowners who have had policies that were not renewed based on wildfire risk associated with changing weather patterns.

“We’re seeing pockets of nonrenewals and cancellations happening around the state, and we’re recording that data, and looking where that is happening,” she said.

She noted that insurance companies have “catastrophic modeling.”

“In the past, what they have been doing is looking at the claims that they had paid and basing their premiums and where they want to insure based on that going forward,” she said in the meeting. “Now they’re looking prospectively, and they’re looking at these catastrophic modeling maps as to where the risk looks the highest.”

She noted that insurance company State Farm nonrenewed about 1,400 policies around Pacific Palisades, California, about six months before a wildfire killed 12 people and burned thousands of structures there in January.

“We can’t, obviously, require an insurance company to insure you,” she said. “But we can look into it for you to see if … you’re being treated fairly.”

Lindberg said he wishes Kuderer would take a harder line with companies who choose not to cover homeowners.

“I would say to Farmers, ‘I think you need to take some risk in this state if you want to do any business,’ ” he said. “I think they would instantly be reupping some of these insurance polices that they have canceled. To lose that business would be disastrous to them.”

Hardened target

The Spokane County retiree followed along with the rest of the community five years ago as the Babb Road fire raced out of control on Sept. 7, 2020, and destroyed 120 homes and most of the community of Malden.

He also saw devastation wrought two years ago by the Oregon Road fire near Elk and the Gray fire near Medical Lake. On the same day, Aug. 18, 2023, those blazes burned a combined 21,000 acres and destroyed 366 homes.

As of late last year, insurance companies paid out more than $212 million on claims for those who had insurance in the Oregon Road and Gray fires.

However, scores of those homeowners who filed claims later told the Insurance Commissioner’s Office that companies canceled their plans or, like Lindberg, didn’t renew their policies. Those drops and nonrenewals extended to neighbors who avoided damage but have property near the fire lines.

But Lindberg doesn’t live anywhere near Malden, Medical Lake or Elk.

His home is located on the west side of Tower Mountain, which is southeast of Spokane’s South Hill and south of Browne Mountain.

“If you back up and take a satellite picture of our area, it does not look very good,” he said, saying it looks like a home in the middle of a forest. “But if you get down on the ground and look at our area, my neighbors and myself over the last several years have probably spent $300,000 or $400,000 (total) on fire abatement.”

After retiring in 2001, Lindberg and his wife found 10 acres not far from the KHQ television tower. Almost immediately, he began cutting limbs off trees and thinning the timber to make his home more defensible.

Three times, he said he worked with the state Department of Natural Resources as part of a cost-sharing grant program where state crews visit the site, offer advice to help make it more fireproof and then pay for a portion of the work to do it.

In addition to the tree thinning, Lindberg said he bought and buried a 7,000-gallon tank in his yard. Using rain runoff from his roof, he filled the tank and fitted it with hookups that are compatible with trucks from local fire crews. He even had state and local fire crews come check his hookups.

He added about 400 feet of fire hose so that any attending firefighters would find a ready source of water to battle blazes.

Lindberg said his neighbor, who has an 80,000-gallon swimming pool, also fitted it with compatible hookups and even bought a new fire truck, which sports a 2,500-gallon tank, six spray nozzles and a water cannon on top of the truck’s cab that can be directed by the driver.

When he built the house, Lindberg thought he was in good hands because he chose roofing material with the highest fire rating, meaning the type least likely to burn, and chose cement-board siding to protect it from any potential blaze.

Based on all that work, Lindberg assumed that, like a good neighbor, an insurance company would at least take that into account.

“Never has any insurance company even suggested that they come up and look,” he said. “When I’ve asked them, and told them all these things, and asked them, ‘Do you care?’ Unilaterally, they say, ‘No, we don’t care.’ ”

Kuderer responded: “What you’re telling me just seems outrageous.”

Spokane’s new season

State Sen. Marcus Riccelli, D-Spokane, who attended Kuderer’s town hall, sympathized with Lindberg’s position and noted the hotter, drier summers that recently have been punctuated by air quality concerns.

“I mean, I’m a soccer coach. We have an extra season here,” Riccelli said. “It’s called fire season. It’s devastating.”

Rep. Timm Ormsby, D-Spokane, who also spoke on the panel, said he, too, has had to deal with losing insurance.

“I’ve been a victim of that myself,” he said. As a longtime policy holder, Ormsby was dropped “for no apparent reason. I just had to go shopping for another insurance plan.

“The frustration from our constituents is palpable,” Ormsby continued. “It’s a very real thing. And the frustrating part is, I feel like our hands are tied. We have very few tools.”

At the meeting, Lindberg said he met a handful of homeowners facing similar situations. Several of his neighbors have also lost insurance plans, which they believe was based solely on their similar ZIP code.

One of the attendees said he had a fire hydrant in his front yard, and the insurance company dropped him anyway, Lindberg said.

Kuderer said the state does have a potential stopgap for those who can’t find insurance, but it’s limited. It’s called the Washington Fair Plan.

It’s the “insurer of last resort,” she said.

The top reason state residents say they are losing insurance in the state is for wildfire risk, she said. The plan is not paid by taxpayers. The state funds it through a surcharge it imposes on insurance companies.

“We have a relatively small usage rate for the Fair Plan,” she said.

Currently, only about 300 residents are using it. And it has some limitations. For instance, for those who enroll, they have to pay for the premiums in one lump sum at the beginning of the year.

“And in comparison, California on their Fair Plan has 750,000, so, we are relatively small,” Kuderer said. “We would like to keep it that way. We want to keep it transitory.”

However, if more and more residents can’t find affordable insurance, the program may not be able to meet the needs.

In Lindberg’s case, he said he’s reached out to about 10 companies after Farmers dropped him. All but one said they would not insure him.

He said he was paying about $4,000 annually for Farmers to insure his home, which he noted was already historically high. Reached Friday by telephone, a representative from Farmers said she didn’t have enough information to provide a comment.

But the one company that agreed to insure his rural home wanted to charge Lindberg almost quadruple for a new policy: $15,000 a year. At that rate, the monthly premiums would nearly equal the highest mortgage payment he’d ever paid.

“How can this be acceptable? With the cost of everything else in this world going through the roof, that is just unrealistic,” Lindberg said. “I mean, it’s stupid.”