The Biggest Threat to Property Value

The single most important factor that will affect Redhill Forest property values in the future is insurability.

A clear trend is emerging in wildland areas, where, first, insurance premiums for structures increase, and then insurance becomes unavailable altogether.

A Redhill owner with a new home under construction called her city home insurer, Allstate, and asked to get coverage. She was told that her new home was twelve miles away from the fire station in Fairplay, and they would only insure homes under ten miles away.

And this is how it happens, one small denial at a time, and then a rush for the exits, where all insurers pull out of a market.

For years, we have used Chubb to insure our properties. They are one of the most elite insurers in the market, and you pay for what you get. Unlike most traditional mass-market insurance companies (the ones that advertise on TV), Chubb will settle a claim for full replacement value. Most insurance companies don’t.

During the Marshall Fire outside of Boulder, a few years ago, I watched a live Denver TV news station interviewing a homeowner several miles away against the background of the still-raging fire. It was a remarkable interview.

The man had lost a previous home in a fire some years earlier, west of Boulder. This was the second home he had lost to wildfire. The reporter asked him, “You’ve now lost two houses to wildfire, how does that make you feel?” In a viral-worthy answer, he laughed and said, “It’s okay, I’m with Chubb.”

I can attest, based on my own first-hand experience, that claims handling with Chubb is at a different level. The company, at its discretion, will send contract firefighters to defend a home. Makes sense. It’s cheaper to do that than settle a replacement claim. However, that kind of coverage and service comes with a cost. Our premium costs for our Redhill home are expensive.

Insuring with Chubb and other elite companies usually requires a thorough underwriting process. To obtain coverage for our Vail Valley home, a field underwriter visited our home and spent nearly three hours going through it and documenting the house with photos.

Our Redhill house was completed toward the end of the pandemic, and it was a virtual inspection.  I had to submit several dozen photos, plans, and had a one-hour interview before we were approved for coverage.

Recently, Chubb sent me an e-mail promoting an in-depth risk analysis report through a service named Property Guardian. As a Chubb client, I got a 20% discount. You can get an overview report for $40 or an in-depth one for $250. I opted for the more expensive option, and with my discount, it came out to $200. You don't need to be a Chubb client, and your homeowner's insurance may also qualify you for the discount.

When I designed our house, wildland fire was high on my mind. I specified non-combustible materials, including stucco, stone, fiber-cement siding, synthetic decking and fascia, and asphalt shingles. There is rock all around on the ground for a wide defensible space, and no vegetation or combustible material close to the house.

Our homesite is unusual for Redhill Forest as we don’t have many trees. For us, that was a plus as it’s all about the view.

After charging my credit card, this report hit my inbox in less than ten minutes. It utilizes sophisticated satellite imagery, along with various historical databases and weather information.

As a Redhill owner, I wanted to share my report with you so you could start thinking about your property. If you own a home, the adage “an ounce of prevention is worth a pound of cure” is very true. You should research and plan for fire mitigation. This is especially true if your replacement coverage is less than 100% (check your policy carefully!).

If you are a vacant land owner, there’s not much you need to do. However, you should know that the continuing rise of insurance costs may put a damper on both unimproved and improved property values. Currently, buyers consider the carrying costs of property taxes and HOA dues. However, insurance costs are already becoming part of the front-end analysis and may discourage buyers if this rising premium trend continues. And there’s no reason to think it won’t.

Here’s the report on our house. I hope you find it instructive.

This would be lower if we had a standing-seam metal roof.

Redhill Forest’s private water system is not in the national database. A hydrant is across the road from our house. However, Northwest Fire Protection District told me that it does not factor into any insurance underwriting. A crucial reality is that, with Redhill’s two water tanks, even at full capacity, they would likely be drained after fighting two adjacent home fires. The community water system is not designed for an overwhelming wildfire, nor would it be affordable to build that capacity.

The 5-mile flame length map shows that the forested parts of the Redhill ridge are at highest risk.

This accurately reflects our experience with prevailing winds and the trees below the house.

With self-analysis, we graded out very high here, except for adding ember-resistant covering of our vents.