Protecting Residences From Wildfires

Financial Incentives

It is neither feasible nor desirable to accomplish all the above recommendations and standards by governmental action through laws and regulations, yet they all have a price, either in money or in labor, and it is not likely that more than a small portion of the homeowners will carry them out voluntarily unless the benefits can be seen to outweigh the costs. The thousands or millions of property owners cannot be expected to be informed adequately of the hazards and risks involved in home ownership over long periods of time in areas of varying fire hazard. On the other hand the few hundred people who control insurance rates, loan terms, and taxes can, and should, be so informed and take the action to set those rates in such a way as to reflect true probabilities of loss and costs of fire suppression.

Insurance Surcharges

A so-called brush surcharge has been published by the Insurance Services Office (1S0) for a good many years. Actually it is based on a combination of factors only one of which is the amount of brush clearance. The other factors used are: type of roof, fire protection class, and response time. Although a step in the right direction, the program is only partially effective for several reasons. Most important is the fact that the surcharges do not reflect the actual probabilities of destruction by fire, and in particular show unrealistic differences between approved and unapproved roofs (20percent difference in rate compared to 95-percent difference in loss actually measured). Because of this owners with fire-safe properties are subsidizing those with unsafe properties (table 5).

Secondly, the surcharge schedule does not take fire hazard severity classification into account. Thirdly, not all underwriters subscribe to the services of I SO, so they are not guided by its recommendations. A revised rate schedule could easily be prepared to incorporate surcharges for substandard installations and rate reductions for those with protection in excess of the standard, and based on true probabilities which would take into account the experience gained from the thousands of buildings destroyed by conflagrations in the past 10 or 15 years (table 6).

In order to apply to all insurance companies rather than only to those affiliated with 1S0, such a rate schedule could be established by the State Department of Insurance (Los Angeles City-County Fire Bd. Inquiry 1971, Howard and others 1973).

Proposed Standards:

  1. In addition to the criteria already used to determine insurance surcharges, rates should reflect various levels of fire hazard severity classification.
  2. Rate schedules should be revised at 5-year intervals, or oftener, to reflect actual fire loss experience from wildland fires in the previous 10- to 15-year period.

Loan Terms

Mortgage rates and other conditions of loans could be adjusted to encourage fire-safe practices in much the same manner as suggested for insurance rates. High interest rates and other unfavorable conditions for loans on substandard projects and installations coupled with lower rates and favorable conditions for those which exceed the standards would encourage the latter. Such practice is perhaps not entirely consistent with current money market practices. But since the risk is never completely eliminated by insurance coverage, such practice would represent a judicious assessment of the risks to the lender, and would be effective with home buyers. From the standpoint of public safety it would be even more effective if applied to the large loans to developers and builders. If builders sell only fire-safe homes, subdivisions and mobile home parks, the purchasers of their products will start, at least, with low-risk situations. Proposed Standards:
  1. Bare compliance with the standards set forth above should qualify for current market interest rates.
  2. Progressive degrees of noncompliance with the above standards should lead to progressively higher rates.
  3. Fire-safe practices in excess of the above standards, considered minimum safe practices, should qualify for rates below current market rates.

Tax Adjustments

Fire-safe practices by property owners reduce the cost of public fire protection services. The lack of such practices not only exposes the property of the owner or occupant and neighbors to increased risk of destruction by wildfire, it also makes the task of firefighting much more difficult and therefore most costly. Encouraging fire-safe practices through tax incentives would not be a new concept. Tax incentives are already used by both State and Federal Governments to promote energy conservation measures (e.g., insulation, thermal windows, weatherstripping), and they have been used in the past for other purposes. There is no reason, then, why such incentives should not be used by local and/or State governments to encourage fire-safe practices in or near wildland areas (e.g., fire engine access to swimming pool water, fire-resistant roofing, vegetative clearance, granting an easement for a fuelbreak). This approach would be accepted by property owners and occupants with much more grace than the regulatory approach (Alger 1971, Stallings 1970).

Proposed Standards: Enact through legislation tax incentives or penalties, or both, for compliance or noncompliance with minimum fire-safe practices as set forth in this report or as developed for local application based on actual experience and principles of fire behavior and meteorology and taking into account local natural vegetation.

prevPrevious Section backBack to Table of Contents nextNext Section