Nevada has become the first state to allow insurance companies to issue policies that exclude wildfire coverage. The experiment, which could become a national model, aims to tamp down skyrocketing costs. But critics worry it could hurt homeowners.
The new law, AB 370, went into effect this month. It was approved unanimously by Nevada’s Democrat-led legislature and signed by Republican Gov. Joe Lombardo.
The provision, called “a regulatory sandbox,” allows insurance carriers to propose omitting specific types of coverage, like wildfire insurance. A regulatory sandbox is a space for live testing of products and services conducted in a controlled and regulated environment.This wildfire insurance “carve out” is scheduled to be discussed by the Nevada Division of Insurance Thursday February 5th in Carson City and Las Vegas and online.
But consumer advocates worry homeowners could be without wildfire insurance without knowing it. Michael deLong, a research and advocacy associate with the Consumer Federation of America, said this law could set a dangerous precedent.
“Insurance is about protecting people and pooling risks, and when you have a situation where they start undermining coverage and carving out these disasters, so you get less and less protection, it generally will increase costs to consumers,” deLong said. “Then, they’re left in the lurch.”
The Consumer Federation of America conducted a study on homeowner insurance rates called “Overburdened” that looked into rates from 2021-2024. DeLong said rates increased significantly across the country.
“We found that homeowners insurance costs increased well above the rate of inflation,” he said. “On average, nationwide, they went up by $648.” According to the report, the national average for full coverage was “$2,656 per year (or $221 per month) in 2021. By 2024, that number increased to an average of $3,303 (or $275 per month).”
Contributing factors to increasing costs include increased cost for labor and building materials mixed with factors such as more extreme weather events.
Utah was first on the “Overburdened” list, with homeowners insurance premiums rising by 59% in the state over four years. Other Mountain West states seeing high increases included Arizona (third on the list at 48%) and Colorado (16th on the list at 27%).
This story was produced by the Mountain West News Bureau, a collaboration between Wyoming Public Media, Nevada Public Radio, Boise State Public Radio in Idaho, KUNR in Nevada, KUNC in Northern Colorado, KANW in New Mexico, Colorado Public Radio, KJZZ in Arizona and NPR, with additional support from affiliate newsrooms across the region. Funding for the Mountain West News Bureau is provided in part by the Corporation for Public Broadcasting and Eric and Wendy Schmidt.
