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Can Home Hardening Save Home Insurance for Californians?

Amelia O’Donohue and Jordan Brinn

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Executive Summary

How home hardening impacts insurance
Most cost-effective retrofits
Future research and policies

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Mid-Quarter Presentation Review

Insurance background
Wildfires 🡪 losses for insurers (non-renewals, increased premiums)
Focus on building codes

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Since we last presented...

Narrowed focus

Conversations with III, CBIA, Headwaters, and Michael Wara and Rebecca

Data on retrofit pricing in CA

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CA Insurance Premiums Are Artificially Low

Premiums do not align with home values
Wildfires have made insurers unprofitable
Insurers have raised their premiums
Changing insurance market will affect property values�

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Impacts of Home Hardening on Insurance

Home hardening is effective
Admitted carriers have home hardening requirements
Insurers evaluate risk of individual home and neighborhood

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State

$100M from FEMA + $30M from CA
Anticipated +$500M

Local

Work with communities

Insurers

AAA + FireSafe Marin
State Farm + Firewise

Financing Home Hardening

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Why Do We Care?

11M Californians live in WUI areas
1-3M homes at high risk in WUI
Homes already in danger, need to be retrofitted

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Structural Components of Home Hardening

Most important concept: ember protection
Outside (roof, exterior wall, decking)
Inside (cover vents, eaves, and chimneys)

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Home Hardening Retrofits

Prioritize rain gutters, chimney mesh, eave upgrades, vents

Roof = “high bang but high buck”

Defensible space

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Cost Estimates: Home Hardening Retrofits for a 2,500 sq ft Single Family Home in California

*Based on Home Depot website

**Same cost as a new deck

Jordan

We put some back of the envelope calculations to what Amelia just described. Green highlighted items are big bang for your buck while the yellow highlight indicates high buck but high bang. These numbers were based off of retrofit prices from a headwater economics study which used a house in montana along with RSMeans data which averages construction and material cost data from 700 cities across the US. Per the suggestion of the CEO of the California Building Industry Association, we used a 1.25 multiplier to estimate California prices from this national average. The CBIA is also looking to do more thorough calculations of these numbers.

These numbers may seem high, but they are pretty much on par with what a new version of that item would cost during new construction or renovation

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Herd Immunity

Communities must work together
Ex, Boulder, CO

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Obstacles to Progress

Old homes

Lack of accurate fire risk models

Communities prioritize speed of construction over fire-resistant construction

Insurance/property markets must adjust

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Next Steps for CA Communities

Home hardening is effective
Entire communities must work together
Premiums will increase and should be major factor in home ownership decisions
Local governments should implement community home hardening programs

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Future Research

Home hardening calculations (retrofit or TOC comparison)

Work with building industry to understand and educate

Propose plans for funding implementation

Jordan

- Improving upon our back of the envelope calculations for home hardening retrofits in California. This could also include a comparison to cost at time of construction and should be done in collaboration with Bob Raymer and Dan Dunmoyer from California Building Industry Association since they are working to calculate these numbers as well.

- Proposing the best way to implement Gov. Newsom and FEMAs home hardening funding. Options include grants, grant matching, and no interest loans modeled after the PACE program for energy efficiency.

- Communicating with companies in the building industry to understand their perspective and help educate them about California 7a Building Code.

Additional research into best practices for community wide home hardening engagement.
Long term scientific/policy side: propositions for 2021 building code updates – policy = require more buildings to comply, science = add and change requirements – for example, the CBIA will be recommending that all new roofs must be class a rather than class a or b and that required vent coverings be higher tech (honeycomb that is heat activated)

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Sources

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Thank you!

Any questions?