General Information
Do I have to buy homeowners insurance?
Oregon law does not require consumers to have
homeowners insurance, but if money is owed on a
home, then a lender will require it.
How do insurers determine whether to oer or
renew a policy to a property owner?
When you apply for homeowners insurance, your
level of risk is evaluated through a process known as
underwriting. Each insurer’s underwriting rules for
eligibility vary, which means a consumer may be able to
nd a policy with one insurer when another declines.
Insurers may not renew a policy for many dierent
reasons. These may include a change in risk, failure to
maintain a property, non-payment of premiums, fraud,
or misrepresentation of information.
What does my insurance company use to decide my
monthly premium?
Insurers can use many dierent rating factors to
determine premium. Some common factors include:
• A home’s age and replacement cost
• Type of construction
• Location
• Availability of re protection
• Claim history
Guide to homeowners insurance
350 Winter St. NE, Rm 410, P.O. Box 14480, Salem, OR 97309 503-378-4140 dfr.oregon.gov
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Terms to know
Actual cash value – the value of property
determined by the cost to replace it, subtracted by
an amount reecting depreciation.
Additional living expense – coverage for
reimbursement of temporary expenses while
the policyholder is unable to live in their home
because of damage caused by a covered peril.
Admitted insurance carrier – an insurance
provider who is licensed to write and sell certain
types of insurance by the state in which they are
based.
FAIR plan – serves as the insurer of last resort if a
property owner cannot nd insurance coverage in
the standard market. The FAIR plan oers a basic
policy that covers dwelling and contents coverage
at actual cash value.
Liability coverage – provides the policyholder
with protection against claims of injury to another
person or their property when the loss was caused
by the policyholder.
Peril – a specic cause of damage or injury.
Premium – the amount a consumer pays for an
insurance policy.
Rating plan – a system that shows adjustments
to the premium that reect the most current loss
experience of the insured.
Replacement cost – coverage for payment of the
actual cost of rebuilding or repairing the dwelling
using materials of a similar kind and quality to
restore it to its pre-loss condition.
Standard market – the market where highly
regulated insurance products are oered by
admitted insurance companies to relatively low-
risk policyholders.
Surplus lines – insurance that lls the need
for coverage in the marketplace by insuring
higher risks that are declined by the standard
underwriting process of admitted insurers.
Underwriting – the process by which an insurance
company assesses the risk of oering an insurance
product to a consumer, and at what rate.
What is the division’s role in approving rates?
Insurers charge premiums based on rating plans that
are led with the Division of Financial Regulation (DFR).
Any change to a rating plan must also be led with
the division. DFR reviews it for compliance with the
Insurance Code and other regulatory guidance. Oregon
law states that insurance rates cannot be excessive,
inadequate, or unfairly discriminatory. In other words,
all rates must be actuarially justied.
Common Coverage
What does my policy actually cover?
The coverage available in a homeowners policy
includes dwelling (structure), other structures, contents,
liability coverage, and additional living expense
coverage.
• Dwelling coverage includes the cost to rebuild or
replace the primary structure and remove debris.
• Other structures coverage includes the cost to
rebuild or replace other structures not attached
to the main dwelling, such as a barn or storage
shed.
• Contents coverage includes the cost to replace
personal property.
• Liability coverage includes any liability arising
from incidents that occur on the premises. An
example is a lawsuit by someone injured on your
property.
• Additional living expense coverage reimburses
for temporary expenses while the home is
uninhabitable due to damage by a covered peril.
Note: Some policies provide coverage on a
replacement cost basis, but others provide actual
cash value coverage.
What is the dierence between replacement cost
and actual cash value?
Replacement cost is the price to rebuild the primary
dwelling structure (your home) or repair damages
using materials of a similar kind and quality.
Actual cash value is the value of your home minus
wear and tear, which is often not enough to fully
repair or replace the structure.
Is there coverage if I cannot live in my home due to
a re or some other event?
Homeowners policies may also cover additional
living expenses if the policyholder cannot live in the
home due to a covered loss or an evacuation order.
This coverage pays you back for your living expenses
while the residence is repaired, rebuilt, or until the
claim is settled, up to the policy limit.
Wildre Coverage
Can an insurance company refuse to cover wildres in
its policy?
No. The Oregon Insurance Code requires every
homeowners insurance policy to include wildre
coverage. Oregon is a standard re state, which means
re is always a covered cause of loss peril. A re loss is
covered, no matter the source, whether from a kitchen
stove, electrical system failure, or a wildre.
How are wildre models used?
Although many insurers use wildre models for
underwriting and rating, some use wildre models only
for underwriting purposes. These models may include
mitigation eorts in the evaluation of the site and other
characteristics, including defensible space and fuel load.
What are defensible space and building hardening
and how do they factor into underwriting and rating?
Defensible space, in simple terms, is the buer created
between a structure and the grass, trees, shrubs, or any
wildland area that surrounds it to help slow or stop the
spread of wildre. For more information on defensible
space, go to the Oce of the State Fire Marshal’s website.
Building hardening is the use of re-resistant building
materials that signicantly help in the survivability of a
structure in a wildre. For more information on building
hardening, go to the Building Codes Division’s website.
Defensible space and building hardening are two of
many factors that insurers can use for underwriting and
rating. It is up to each insurance company to decide if
and how they will use these factors.
ORS 737.330
ORS 737.025
Oregon Senate Bill 762 (2021) denes “defensible space” as a natural or human-made area in which material capable of
supporting the spread of re has been treated, cleared or modied to slow the rate and intensity of advancing wildre and allow
space for re suppression operations to occur.
Will insurance companies be using the statewide
wildre risk map for underwriting or rating
purposes?
To date, no insurance companies have indicated that
they plan to use the statewide wildre risk map for
underwriting or rating purposes. In fact, insurance
companies reported to the division in a formal data
call issued on Aug. 2, 2022, that they were not using
or planning to use the state wildre risk map to make
any underwriting or rating decisions. Additionally, the
division has not received any rating plan submissions
that include the state wildre risk map as a rating factor.
Companies currently use their own tools to assess risk
throughout the state.
Cancellation and Alternatives
Can an insurance company cancel my coverage?
Yes, insurers can cancel a homeowners policy under
certain circumstances if proper notice is given.
Cancellations require a 30-day notice, unless it is for
nonpayment of premium or fraud. In those cases, a
10-day notice is required. A cancellation notice must
include the eective date of cancellation and the
reasons for the cancellation.
Will I be able to nd insurance if my coverage is
canceled?
Fortunately, Oregon has a robust insurance market
with nearly 150 companies writing business in the
state’s standard market. If consumers cannot nd
coverage in the standard market, they can also obtain
coverage through the Oregon FAIR plan. For higher
risk properties, homeowners insurance can also be
obtained through the surplus lines market, usually at
an increased cost.
What is the Oregon FAIR plan?
The FAIR plan serves as the insurer of last resort if a
property owner cannot nd insurance coverage in
the standard market. The FAIR plan oers a basic
policy that covers dwelling and contents
coverage only on an actual cash value
basis. DFR is developing a legislative
concept on enhancements for the
FAIR plan to provide greater consumer
protection. You can contact the FAIR Plan
Association at 503-643-5448 or
What is the surplus lines market?
The surplus lines market is a specialized
part of the insurance industry that consists
of insurers who oer coverage for risks that
are not typically covered in the standard
market. It also operates dierently than
standard market, and tends to be pricier
since the risks that the insurer takes on
are more perilous. To learn more about
surplus lines coverage, you can contact an
insurance agent, or the Oregon Surplus Line Association
at 503-718-6700 or info@oregonsla.org.
How can I nd the right insurance company for me?
An option if your policy is canceled or nonrenewed is to
work with an insurance agent. An agent can help you
search for insurance by researching many companies
at once. Remember, there are nearly 150 companies
oering coverage and it is always best to shop around.
Who can I contact if I have questions?
DFR oers free help to people with insurance questions,
including about understanding policy changes, rate
increases, cancellations, and nonrenewals, or to check
a license. Call 888-877-4894 (toll-free) or visit our
website at dfr.oregon.gov. You can also email DFR.
[email protected]v. Also, you can le
a complaint online or call to request a paper copy be
mailed.
DFR is committed protecting Oregonians’ access to fair
insurance products through education, regulation, and
assistance.
440-5794 (8/22/COM)
