In the second week of June, Rachel Borup received a letter.
Progressive would not renew the homeowners insurance policy for her house in Salt Lake City’s quiet, upscale St. Mary’s neighborhood in the foothills. The reason? The house’s wildfire risk score exceeded the company’s “eligibility guidelines.”
Borup was surprised.
“I’ve never thought of our house as being in the path of a wildfire,” she said, “we are in a suburb.”
She discovered several neighbors experienced the same thing on the social media network NextDoor.
One resident wrote, “we were just dropped by Nationwide for the same reason.”
“Not so easy to find a replacement, cancellations are happening everywhere,” another chimed in.
“It’s frustrating because you have to have homeowners insurance,” Borup told The Tribune, “yet there are becoming fewer and fewer options for that.”
The threat of wildfire is growing across the western United States — Boise State University researchers estimated that over the past two decades population exposure to wildfires grew by 125% in the contiguous United States.
In Colorado, California and Hawaii, entire neighborhoods have burned down. A grass fire near Salt Lake City’s Ensign Peak injured five people and burned 100 acres in 2018.
(Rick Bowmer | The Associated Press) A grass fire, cause unknown, burned 100 acres near Ensign Peak in Salt Lake City on July 24, 2018. It threatened homes and injuring five people, including three firefighters.
Salt Lake City has “a very high risk of wildfire” according to the U.S. Forest Service, that’s “higher than 96% of communities in the US.” That hasn’t stopped the building. In Utah between 2011 and 2020, more than 6,000 new homes were built in high-fire-risk zones.
The St. Mary’s neighborhood is far from the remote mountain town that comes to mind when people imagine wildfire-prone places. While some of the houses creep up to brush-covered foothills, most sit next to other homes in cul-de-sacs.
According to FEMA’s National Risk Index, the area has a “relatively moderate” wildfire risk. It is a typical suburban neighborhood — a quick drive to the University of Utah and just 15 minutes from Salt Lake City’s downtown core.
“You read about these stories in California or Florida and it seems far away,” Borup said, “but this feels very close to home and real.”
Expensive homes and balancing ‘exposure’
While Utah hasn’t dealt with a devastating fire yet, residents are starting to deal with the fallout of those risks with their insurance. Utah was one of 18 states where insurers lost money on homeowners coverage, according to an investigation from the New York Times. Utah insurers losses more than tripled between 2013 and 2023, the outlet reported.
Progressive did not respond to The Tribune’s request for an interview or share why the company might stop covering certain homes.
Home insurers may be dropping coverage because they’ve agreed to cover too many high-value homes in areas that could be at risk from wildfire, according to Matt Child, CEO of the insurance trade association Utah Independent Agents.
If an insurer is covering 10 $4 million mountain homes, for example, it may decide to pull back “if they’re overexposed in a particular area that’s subject to a particular risk that could jeopardize the rest of their business,” Child said. The company could lose tens of millions overnight.
“There’s a lot of insurers that just will not write in Emigration Canyon,” Child said. “They just will not do it because the brush fire exposure is too high.” The same goes for parts of Park City, or remote areas without nearby fire stations. “Brush fire is the panic button that most of the insurance industries hit,” Child said.
Plus, Utah is a smaller market with fewer people to spread the risk across.
Utah homeowners might be surprised to find that their urban home in a dense neighborhood surrounded by thoroughfares is actually at risk, according to insurance companies.
“Anything east of 13th East, I’m looking at with a fine-tooth comb,” Child said. " I’m looking at age of home. I’m looking at [the] age of [the] roof. I’m looking at defensible space. Do you have trees that overhang your home?”
Plus, with higher construction and labor costs insurers may have to pay much more to replace what’s lost in the event of a wildfire — especially for million-dollar homes with custom finishes.
“Brush fire is a scary beast,” Child said. It doesn’t just take out a house, “it takes out a neighborhood.”
(Christopher Cherrington | The Salt Lake Tribune)
What can homeowners do?
If a homeowner loses coverage there are other options. In 2023, 105 companies wrote homeowners insurance policies in Utah, according to Utah Insurance Department Commissioner Jon Pike.
Homeowners who lose their coverage should work with an agent representing multiple insurers, Pike said.
“I think generally in the state, we don’t have an accessibility problem in terms of finding an insurance company to insure your home,” Pike said, “but we are starting to see a bit of an affordability problem, especially in areas that have higher risk.”
(Bethany Baker | The Salt Lake Tribune) Homes sit near the foothills in the St. Mary's neighborhood in Salt Lake City on Saturday, June 29, 2024.
Homeowners with homes in fire-prone areas may have to turn to surplus lines insurance — policies that cost more for higher-risk situations. The average price per policy in 2023 was $6,456.
As a state regulator, Pike said he’s looking at ways to ensure that businesses and homeowners can maintain coverage. “We want to make sure the insurance companies are solvent, but we also want to make sure that the consumers know what to expect and that it’s transparent,” he said.
Providing maps or other intel about which areas are of particular concern for wildfire could help consumers.
But the insurance industry may reach a point where it wants to exclude wildfire from standard policies, Child said, although they don’t currently have the authority to do that on their own.
In the meantime, Child thinks rates will continue to go up for the next few years. While the average Utah annual policy price was the lowest of the Western states in 2022, the average increase in 2023 was 17% and in 2024 policy price rose by an average of 19%.
Homeowners facing higher prices may be the lucky ones.
Borup tried to ask her insurer if there were steps she could take to get back on the policy, but she said she was told it was out of her control.
Last week, she started asking neighbors who insured their homes. She’s making a list, and plans to reach out to insurers soon.
“Honestly,” Borup said, “I’ve been dreading it.”
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