Cabin Insurance. Doug Gann & Jay Tripathi National Forest Homeowners NFH Seattle Conference, April 2017

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1 Cabin Insurance Doug Gann & Jay Tripathi National Forest Homeowners NFH Seattle Conference, April 2017 Sponsored by: Lake Wenatchee Summer Home Association

2 Agenda Why Insurance? Insurance Survey Results Insurance Suggestions Loss Prevention Suggestions Cabin Insurance Initiative Q&A Discussion

3 Why Insurance? Falling Trees Devils Gate, CA

4 Why Insurance? Fire Two cabins lost in same fire Lake Wenatchee, WA

5 Why Insurance? You might lose your cabin in a flood.literally! Mt Hood, OR

6 Why Insurance? Whether direct hit or near miss, cost to repair damage Rimlock Lake, WA Lake Quinault, WA

7 Insurance Survey Demographics 887 Surveys completed (18% of 5,036) Mix of NFH member & non-member cabin owners Cabins located in 20 States Cabin Size Cabin Age Size Sq. Feet Range Year Built Smallest 100 sq ft Oldest 1890 Largest 3,600 sq ft Newest 2016 Average Size 988 sq ft Average Age 73 years, ~1943 Most 500-1,500 sq. ft. Most 1920 s s

8 Cabin Damage or Loss in last 10 Years? No. Range Loss > Total Type of Loss Reported Low* High $10,000 Loss? Break-in/Theft/Vandalism 61 $0 $10,000 Falling Tree 59 $200 $100, Snow damage 18 $700 $25, Wind Storm 10 $500 $6,000 Water damage 9 $1,500 $5,000 Break-in/Bear 7 $0 $25,000 1 Fire 4 $300 $400, Other 16 $0 $40,000 1 Total % of those surveyed reported a damage, loss, or claim 91% of reported losses < $10,000 Other includes hail storm, ice storm, earthquake, flood, lightning/electrical, dock damage, failed well, insect damage, rodent damage, & dog bite.

9 Is Your Cabin Insured? Have Insurance? Satisfied? Yes % Yes % No % No % Total % Total % Top Cabin Insurers Responses % Responses State Farm Insurance % Safeco Insurance 63 9% USAA 51 7% Farmers Insurance 46 7% California FAIR Plan 44 6% Lloyds of London 25 4% 87 different insurance companies identified insuring cabins 67% respondents use same insurance company for other insurance needs

10 Insurance Coverage & Cost Responses Range Coverage & Cost Counted Low High Average a) Replacement Value 476 $20,000 $1,020,900 $202,956 b) Liability Coverage 380 $50,000 $2,500,000 $418,424 c) Annual Premium Cost 476 $167 $5,757 $959 Counted only responses that included both replacement value & annual cost Not all policy terms (e.g. deductible amounts) that impact cost were collected by this survey, so an apples-to-apples comparison lacks precision.

11 Cabin Insurance Pricing $3,500 Annual Cost of Insurance vs. Cabin Replacement Value $3,000 $2,500 $2,000 $1,500 $1,000 $500 $0 $0 $100,000 $200,000 $300,000 $400,000 $500,000 $600,000 $700,000 $800,000 Plotting Annual Cost against Replacement Value reflects significant price variance for insurance with similar coverage. Chart represents 470 responses. Highest 3 & lowest 3 insurance prices removed for illustrative purposes.

12 Does Pricing Vary by State? $6.00 $5.00 Cost/$1,000 $4.73 $5.64 $4.00 $3.49 $3.00 $2.00 $1.00 $0.00 OR ID MT All CA MN WA Cost/$1,000 $3.49 $4.48 $4.71 $4.73 $5.17 $5.24 $5.64 Low Cost $210 $225 $256 $167 $167 $375 $310 High Cost $2,600 $3,312 $3,411 $5,757 $5,757 $1,600 $3,181 Avg Cost $783 $964 $1,447 $959 $1,103 $801 $881 Avg Replacement $224,102 $215,390 $307,336 $202,956 $213,215 $152,844 $156,190 Responses State OR ID MT All CA MN WA

13 Reason Cabin not Insured? Reasons Cabin Not Covered by Insurance? Responses % Unable to find Insurance Co. willing to provide coverage % Insurance not affordable 62 22% Insurance was canceled or not renewed 55 19% Other 37 13% Cabin value not worth it 15 5% Total % Common other reasons provided: Don t see the need for cabin insurance Assumed cabin insurance not available Assumed won t be able to rebuild cabin if cabin destroyed Unreasonable restrictions or conditions imposed by insurance company Sub-standard construction cited as reason for denied coverage 93% of those without insurance are interested in obtaining insurance, if affordable While cabin owner expectations vary, most without insurance have similar needs and are willing to pay similar prices as those with insurance.

14 Reasons Cabin Insurance Cancelled Cabin Insurance canceled by Responses State Farm Insurance 13 Allstate Insurance 7 Fireman's Fund 3 Safeco Insurance 3 Farmers Insurance 2 Liberty Mutual 2 USAA 2 Lloyds of London 2 Single occurrence / not identified 34 Total 68 Cancellation Reasons cited: No longer insuring FS cabins Deemed high risk area Forest fire risk No reason given Change of ownership Distance from fire station No longer insuring in California Shake roof or other sub-standard construction Unable to inspect (in winter) Use of wood stove for heating source Unreasonable replacement value dictated by insurer

15 Fire Protection Classes Partially Not Protected Protected Protected Rating Agencies Insurance Service Office (ISO) Washington Surveying and Rating Bureau (WSRB) Rating Criteria Fire Department Capabilities (Manpower, training, equipment, & emergency communications) Distance to Station (< 5 miles) Water Hydrant (<1,000 yards) Insurers Use Varies Impacts availability & pricing Differs by company Some Insurers Simplify Protected (1-8) Partially Protected (9) Unprotected (10) > 5 miles to Fire Station > 1,000 yards to Hydrant

16 Insurance Suggestions Bundle your insurance policies with the same company Preferred availability or pricing reported by many cabin owners If turned down, push back if the Insurers-by-State report reflects that your company does insure RRP cabins. Don t forget about liability coverage Liability issues can be expensive (dog bite example) Search for Insurance Company Use Insurers-by-State report (Resources Insurance) Don t under-estimate cabin replacement coverage Cabin owners who rebuilt all stated the cost was higher than expected Seasonal construction will extend time and cost more Site access may require specialized or alternate equipment, adding to the cost Constructing to historical standards with approved materials will add cost Availability of contractor and/or sub-contractors in rural areas may extend time and/or add cost

17 Loss Prevention Suggestions Break In/Theft/Vandalism Forest Watch program (Resources Security) Access gate (requires FS approval) Shutters and other away-from-cabin precautions Falling Trees Inspect and remove suspect trees Annual Cabin Inspection Weather tight?, Roof?, Plumbing?, Insect/Rodent control, etc. Fire Protection Firewise around your cabin Road access and signage Verify your fire protection class Support your local Fire Department

18 NFH Cabin Insurance Initiative Insurance designed for Recreation Residences NFH exploring with an insurance broker who provides customized group programs Several insurance carriers have expressed interest Expect formal proposal by mid-may with initial offering later this year Proposed Insurance Coverage Cabin Replacement Personal Property Replacement Personal Liability Flood? Earthquake?

19 NFH Cabin Insurance Initiative Insurance Program Design Goals Offer insurance in every state with cabin locations Eligibility & pricing criteria that aligns with recreation cabins Strive for no denial of coverage Strive for flexible terms (minimums, deductables, etc.) Strive for market competitive pricing Cabin Owner to purchase from Insurance Broker NFH facilitates, but assumes no responsibility or liability NFH membership a prerequisite for eligibility Respect existing cabin owner / insurance company relationships

20 Q&A Discussion Questions? Suggestions? Annual Insurance Survey? Where do we go from here? This session was sponsored by: Lake Wenatchee Summer Home Association