Small business owners find themselves left out in the cold when it comes to finding coverage for property in wildfire areas. Auto assigned risk pool won’t accept Farm Equipment and FAIR Plan won’t cover vehicles.
When insurance isn’t an option, property owners will do everything in their power to prevent a loss, forcing an even greater focus on prevention and mitigation. That’s the only positive in this story. Not caring if there is going to be damage because you have insurance is called “moral hazard.” It’s a human effect, which means we’re all susceptible to it. Take the insurance away, and suddenly keeping property safe and protected has more importance. Carriers would be willing to cover farm equipment if they knew they could depend on property owners doing everything in their power to reduce the risk of loss. Assigned Risk pools and FAIR plans won’t accept the business, so farmers are forced to do what they can physically to ensure their property is wildfire resilient.
Perhaps instead of cancelling policies with unacceptable risk levels or declining the application for new business, companies could require mitigation and prevention steps to be taken for the policy to stay in effect. Then, uninsured farms and farm equipment can become a thing of the past.
Swan Score: D
Property Owners
Property owners risk safety to protect uninsured property
Fire Protection Association
Eliminates moral hazard and motivates risk management focus
Environment
Uninsured farm equipment leads to pollution, environmental harm
Insurance Industry
Instead of declining coverage, why not request mitigation?
Government Entities
$1.8B Agricultural Industry threatened by uninsured farms
