Montana Mulls Mandated Homeowners Insurance Breaks for Fire Prevention

Jan. 16, 2009 – Requiring providers of homeowners insurance and other insurance protections to provide rate discounts to policyholders who practice in-home fire safety and prevention is among several new measures being considered by the Montana Legislature in a move state lawmakers say is intended to cut costs.

Fire is responsible for more homeowners insurance costs than any other peril, according to the Insurance Information Institute. The proposed measures would force homeowners insurance companies to offer rate discounts to homeowners living in the state’s fire-prone “wildland-urban interface” and who initiate fire prevention measures.

Legislators say a mandated homeowners insurance rate discount would compel insurers to educate consumers on fire safety and prevention. Effective fire-prevention measures near “wildlands” typically include clearing brush and using flame-retardant building materials. Legislators also claim offering discounts on homeowners insurance policies for residents who initiate in-home fire-safety measures will provide a suitable financial incentive for homeowners to reduce their fire-related insurance costs.

“You want to change people’s behavior, then give them an incentive,” said Republican state Sen. Rick Laible.

The bills are the first of more than 20 from members of the state Fire Suppression Committee to be heard by lawmakers during this upcoming legislative session. The ad-hoc committee was created in 2007 after Montana endured a summer of intense wild fires that cost the state $43 million.

A study released in the fall by Headwaters Economics, a Bozeman, Montana, nonprofit organization, indicated it cost $36 million to protect state homes from the many wildfires during 2007 with the state paying $13.9 million of the total. The study also predicted the cost of defending homes against more fires in Montana could rise to as much as $79 million in combined state and federal expenses by 2025.

But some of those costs could be eliminated by requiring homeowners insurance companies to educate their policyholders in fire-prone areas about fire-safety, said state Sen. Ken Hansen, a sponsor of two of the bills.

As anticipated, representatives of homeowners insurance providers oppose the measures, saying it places an unfair and costly burden on homeowners insurance companies.

“It seems to me that there are already entities and organizations well-versed and able to educate individual homeowners about the potential dangers in the wildland-urban interface,” said Greg Van Horssen, a State Farm Insurance spokesman.

State Farm is the nation’s largest provider of homeowners insurance protection and is the top insurer of homes in Montana. State Farm officials will continue opposing the proposed legislation.