Editor’s note: This story has been updated with comment from Rep. Heidi Kassama.
At a tentative hearing this morning before the Joint Legislative Committee on Commerce and Labor, Incline Village homeowners pointed to a growing crisis linked to insurance companies, particularly American Family Insurance and Farmers Insurance, terminating or reducing insurance on properties in areas deemed “hazardous” because they are near or within “forested areas.”
During public comment, Incline Village homeowner Sandra Richards told the commission that her monthly homeowners association (HOA) dues have skyrocketed from $600 to $1,700 because her condo insurance policy was not renewed. “Your work is critical right now. We are not in a vacuum. This insurance crisis is lowering property values, destroying communities, limiting homeownership to a select few, impacting tourism and ultimately state and county revenues.”
The consequences of these insurance non-renewals were further explained by Chris Plastiras, founder of Lakeshore Real Estate, which has been selling property in Incline Village for 45 years.
Plastiras told The Globe, “American Family is pulling out of Incline Village. Farmers is gone. The only option in town, as far as I know, is State Farm. The way I see it, it will have a very negative impact on property values because homes that can’t be insured can’t get mortgages. The insurance industry has seen fit to put us in the ‘high risk’ category and remove us from their oversight, allowing the insurance companies to set prices as they see fit. Insurance companies can raise rates relatively rapidly, and that becomes a problem. I’ve seen a lot. I’ve worked in this market through four recessions, and I don’t see a quick fix unless the governor calls an emergency session of the legislature.”
While an emergency session of the Legislature may seem extreme to some, the situation is dire for many fixed-income homeowners who, like Richards, live in single-family homes or condominiums managed by HOA agencies and fear the worst will come if they wait until the Legislature reconvenes next February.
Incline Village is home to more than 100 HOAs that are currently scrambling to find insurance for their properties, with many having to resort to partial insurance or exorbitant rate increases, the burden of which is passed on to owners through increases in assessments and monthly dues.
A 35-year-old real estate professional in Incline Village lives in an HOA community that was dropped by its insurance company, and this year her fire insurance assessment for her condominium is $6,000 and her monthly premiums of $600 are expected to more than double to $1,500.
She told The Globe on the condition of anonymity, “HOAs are inadequately insured. Just last week, four more HOAs were terminated by their insurance companies. In three communities I know, buyers can’t get loans, and my community is one of them. There are eight units for sale in my complex because they can’t get loans. I can’t remember the last time there was this much inventory in just one HOA community.”
Adding to the insurance crisis in the Northern Nevada Basin is the fact that HOA apartment complexes are considered commercial property, not residential. Richards, who spearheads a new group called the Incline Village Property Owners Coalition, told The Globe, “HOAs are considered commercial property, not residential, which means we’re on the back burner in terms of where the insurance commissioner focuses his attention. I’m not criticizing anybody. Nobody expected that.”
Dennis Bremer, president of the Incline Village Association of Realtors, also warned that the trend of refusing to renew home insurance policies is not limited to “red zones” but is spreading across Nevada, including Las Vegas, and other states.
Bremer told The Globe, “This all started in California and it’s just naturally transitioned in this direction. We’re telling other states, ‘Hey, this is coming.’ It’s a natural progression. I’ve been involved on the California side for years, and it’s become more prevalent now because of the recent wildfires.”
According to Bankrate, California has paved the way for insurance companies to exit the real estate market.
“Seven of California’s largest property insurance companies — State Farm, Allstate, Farmers, USAA, Travelers, Nationwide and Chubb — recently decided to limit new home insurance policies in California, raising questions about the stability of the state’s home insurance market. California’s insurance regulations, inflation, increasing wildfires and soaring reinsurance costs have all contributed to California’s current home insurance crisis,” Bankrate reports.
Bremer added, “This is the first year in North Tahoe and around the Nevada Basin. One of the things Insurance Commissioner Scott Kipper has done is reach out and provide data, including a list of uninsured single-family homes, not HOAs. He’s still collecting the data. Las Vegas is also losing insurance. Some insurance companies are pulling out of the state altogether. Nevada is still Several Insurance coverage. The Insurance Commission has been a bit cautious as we have not been completely abandoned…still“If push comes to shove, the commissioners could declare this a crisis and call a special legislative session. At what point does it become a crisis? Real estate agents don’t know, so we’re waiting to see what the commissioners’ next move is.”
When asked how many uninsured homes were provided to the commissioners, Bremer responded, “Well, over 100 single-family homes were removed. Condos are classified as commercial and are not included in the data, which also raises the question of why they are classified that way. Non-renewed homes are hitting the larger HOA communities, which average 100-250 homes, first.”
Bremmer argues that even though Incline Village is a national leader in forest management and defensible space, insurance companies are using outdated data and satellite imagery from a decade ago to assess coverage.
Plastiras, who served 12 years as an elected board member of the North Lake Tahoe Fire Protection District, said, “We have the highest ISO fire department. We’re ISO-1. Vegas is ISO-1, too. But insurance companies don’t recognize that as a criterion for setting premiums anymore. Yes, we’re in a fire zone, but they don’t take into account the nuances of fire protection methods and defensible space, so that’s another issue. We’ve done everything we can to maintain our ISO rating, but now has it all gone to waste?”
North Lake Tahoe Protection District spokeswoman Thea Rancourt told The Globe that they are encouraging affected homeowners to file complaints with the Nevada Department of Insurance and that Fire Chief Somers is working with residents and federal officials on the issue.
After a congressional hearing this morning, Richards told the Globe, “The government has a job to do and they need to solve this problem. We’re in a crisis. We have an insurance crisis, not just here but across the country.”
The Globe reached out to the Insurance Commissioner’s Office and Rep. Heidi Kassama (R-Las Vegas), a real estate expert and member of the Commerce and Labor Committee pro tempore. As of publication, no response had been received but the Globe will continue to cover this developing story.
Update, May 25, 2024, 1:07 PM:
“Insurance is designed to mitigate losses when disasters occur. Nevada has suffered great devastation from wildfires across the state. We saw the issues that occurred in Florida after Hurricane Andrew and the difficulty people had getting insurance, especially for their homes. I am deeply concerned about the issues our property owners are experiencing. I am also concerned about government intrusion into the private market. I am committed to working with Insurance Commissioner Kipper, stakeholders and my colleagues to resolve this difficult and tough situation for all Nevada property owners.” Councilman Heidi Kasama told The Globe.
