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Nevada County asks insurer to reconsider coverage to local business

John Orona
Staff Writer

Nevada County agencies are sending a message to California Insurance Commissioner Ricardo Lara regarding the availability and affordability of commercial insurance policies, and lobbied an insurance company to reconsider its non-renewal notice to a local business.

Nevada County residents are all-too familiar with the lack of insurance options available to fire-prone areas on the private market, as well as the lack of coverage offered through California’s Fair Access to Insurance Requirements Plan, and now businesses are contending with that same problem.

In October, Grass Valley auto retailer DeMartini RV Sales received a notice from Sentry Select Insurance that its commercial auto and property policy would not be renewed when it expired in December, due to “unacceptable exposure due to wildfire risk.”

DeMartini RV Sales could not be reached for comment.

“Did they even come out onto the property to do an inspection? They did not.”— Supervisor Sue Hoek

“As everyone knows, homeowners’ insurance has been obviously on everyone’s agenda,” Supervisor Dan Miller said. “What’s occurring now is commercial insurance is now being cancelled throughout California and our first experience has now been the DeMartini’s RV sales in Grass Valley.”

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The board voted Tuesday to send a letter of concern to the insurance commissioner calling for increased transparency and regulation of the risk models used by insurance companies to determine coverage eligibility. In the letter, the county questions the model, CoreLogic’s RiskMeter, that Sentry used to determine the property’s risk assessment, claiming it contradicted the state’s assessment tools.

The RiskMeter assessment measured the business properties as between 61-80 on a 100-point risk scale, but the California Public Utilities Commission State-wide Fire Map, informed by Cal Fire data, lists the area as a Tier 1, non-fuel area, the lowest-risk designation.

“Currently there is no regulation on how insurance companies do their risk modeling,” Senior Administrative Analyst Jeffrey Thorsby said. “That’s not to say that the risk modeling companies are using are not valid or good methodologies. We’re definitely not saying that, but we do think they’re not necessarily incorporating other relevant factors. Additionally they do seem to be inconsistent with how Cal Fire and the CPUC identify their risk factors.”

Ratings

The letter also questions the assessment map for listing properties with the highest wildfire risk designation immediately surrounded by properties with lower risk designations.

Additionally, according to the Grass Valley Police Department, both properties have an Insurance Services Office Public Protection Classification rating of 3 out of 10, among the safest ratings.

“An ISO rating of 3 is about as good as you can get in our area,” Miller said. “I’ve never seen an ISO rating of 2, even in the city of Grass Valley. For Mr. DeMartini to not get renewed with that type of ISO rating… is insane for Sentry to do.”

Grass Valley and Nevada City Fire Chief Mark Buttron also inspected the property and sent a letter to the Department of Insurance attesting to the property’s fire hardening efforts and asking the department to review the case.

According to the board, rather than any specific complaint about assessment methods, the frustration comes from ambiguity and lack of regulation in how companies decide who will get insurance coverage.

“Did they even come out onto the property to do an inspection? They did not,” Supervisor Sue Hoek said. “That’s the other insurance issue we have. They need to come and do their due diligence and actually come look at the situation, whether it’s homeowner or commercial.”

The board said they would welcome continuing to publicly support local businesses unable to get insurance.

“Every time we have an issue like this with a business we should send another letter and remind them that there was already one business that was impacted this way,” Supervisor Heidi Hall said.

Miller also sent a letter directly to Sentry Select Insurance asking them to reconsider DeMartini’s non-renewal decision. Grass Valley is expected to vote on sending similar letters to the insurance company and insurance commissioner.

“What’s nice (about) this is the coordination between the city of Grass Valley and the county on this,” Miller said. “Hopefully our efforts will make a difference.”

To contact Staff Writer John Orona, email jorona@theunion.com or call 530-477-4229.


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