Even utilities can’t get wildfire insurance

wildfire insurance - Image of Electric Utility with fire in background

It’s not just homeowners and small business owners struggling to get coverage due to wildfires

Wildfire season has now officially started, and some utilities have found themselves operating without wildfire insurance, which means they’ll be responsible for the full cost of any damages resulting from fires caused by their equipment.

Utilities in the West have been struggling to find any coverage at all

Power lines have been blamed for a number of fires over the last few years, and this has meant that utilities have faced an increasing struggle to obtain wildfire insurance coverage to protect them if it should happen to them.

wildfire insurance - Wildfire Risk Extreme

Trinity Public Utilities District is an example of one of these utilities, as it is located in high-risk Northern California, and was responsible for starting a blaze in 2017 that destroyed 72 homes.  Three years following that event, the Special District Risk Management, a public agency in California, informed the utility that it would no longer be providing coverage for fires started by the company’s power lines.  As a result, the utility has operated ever since without any coverage for that risk. It simply hasn’t been able to find another insurer willing to provide the coverage.

Wildfire is already difficult to obtain in the state where the blazes are increasingly common

Blazes have already started sparking to life across the Western United States in what many are predicting will be another lengthy and hazardous fire season.

Many utilities throughout that region are completely unable to find coverage against fire-related claims.  Many others can find it, but not at rates that are in any way affordable for them.  Often, they are companies that make hundreds of millions of dollars in profits, but that risk causing tens of billions of dollars in damages, as was the case in Hawaii and Texas, when electrical equipment was connected with starting fires that were then rapidly driven by wind.

 

Climate change is making it worse

The issue is expected to worsen with climate change, as temperatures rise and droughts become increasingly common, severe, and lengthy. 

For utilities in those areas, wildfire insurance is an exceptionally important form of coverage, and is decreasingly within their reach.

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