The Current Fire Insurance Issue

In past columns, I’ve touched on a variety of aspects regarding the benefit of ICF construction: the energy savings, the ease of construction, the increased R-value, the reduction in utility costs and general operating expenses, and the enormous capability to resist seismic, wind, or fire damage. All these features endorse the overall advantage of ICF construction.
However, one issue has appeared in recent months which once again sets ICF construction ahead as a preferred construction method, and that issue is fire insurance!

Fire insurance has become a major issue in recent months for a variety of reasons. There are several factors influencing fire insurance availability. Two reasons are the January 2025 fires in Los Angeles and a trend of insurance carriers becoming reluctant to offer fire insurance in general. In rural forested areas, tree density has emerged as a critical variable in determining coverage eligibility. As a result, homeowners have found it increasingly more difficult to get fire insurance for wood-frame housing.

This has been particularly noticeable in the last few months, where many homeowners have actually been denied fire insurance coverage. In fact, it’s my understanding that several insurance carriers have stopped offering fire insurance coverage altogether on wood-frame structures. This is a very serious situation, and one that is not necessarily realized by an average homeowner.

What has developed in recent months is that not only are carriers looking favorably at fire insurance for ICF structures, they frequently offer a discount on the standard rate. This was exactly the situation a client of mine found recently. He had planned to build a two-story wood-frame house in the greater San Jose area. When he researched fire insurance, he not only found the rates would be extremely high, but he was actually denied coverage. Naturally, this was a very unacceptable situation. Not to be outdone, he went on to research other kinds of construction and found that ICF construction may well be the preferred method to encourage fire insurance from a carrier. He approached various carriers and found that not only could he now get fire insurance if he were to build with ICF, but they would actually give him a discounted rate.
It’s quite astonishing to me that in the aftermath of the fires that swept through the Altadena and Palisades areas just over a year ago, 90% of the rebuilding in Southern California is with wood-frame construction. I have to ask myself whether those homeowners have actually researched the possibility of getting fire insurance on those finished residences. It’s quite a teaser because the ability to get insurance wouldn’t have been something you’d have to worry about in previous time periods. Typically, all homeowners insurance normally includes fire insurance as a matter of course.

That being said, I’m reminded of the situation after the 1994 Northridge earthquake. At that time, I was a resident in Southern California and performed approximately 600 post-earthquake structural inspections. It was a devastating time for many homeowners. What came out of it, however, was that not only did the insurance premium rate increase for earthquake insurance, but the amount of rebuild coverage that was offered was substantially reduced, amounting to just 10% of the rebuild cost. I can see the scenario going on right now with fire insurance on any kind of wood-frame construction. Is this the issue that will finally make homeowners lean towards ICF construction as the preferred construction method? Only time will tell. I don’t know for a fact how much rebuild coverage is currently being offered with standard fire insurance, but I am certain that the premiums for fire insurance have dramatically increased, and in many cases are not even being offered, even at the increased premium. As you can imagine, this is quite a dilemma.

So as the saying goes, buyer beware. In current times, it is absolutely essential that a homeowner who plans to build with any construction method should research insurance issues and coverage, especially in the context of fire coverage.
In conclusion, it is obvious that ICF construction will continue to be more favored by insurance carriers, as the risk of damage due to both earthquake, wind, or fire is substantially mitigated than it would be for wood-frame construction.