Wildfires and Insurance: How To Protect Your Home

Standard homeowners insurance will typically insure your home and personal property from a wildfire — however, this is not always the case. Insurers may exclude wildfire damage in your policy or deny your application entirely if your home is located in a wildfire-prone area. If you’re unable to qualify for homeowners insurance, your state may offer alternative coverage solutions.

Learn more about wildfire insurance and steps you can take for protecting your home against fires.

What Is Wildfire Insurance?

Wildfire insurance is coverage for your home and personal property in case they are damaged or destroyed in a wildfire. A standard home policy covers both fire and smoke damage and your home insurer should reimburse your losses up to the policy limits.

However, some insurers may deny coverage for wildfires if your home is located in a wildfire-prone area, such as those near dry vegetation or with extended droughts. Your state may have fire hazard severity zones that can help you identify your risk.

Some states enforce a nonrenewal moratorium following a wildfire. For example, California Insurance Commissioner Lara implemented a law that does not allow an insurance company to cancel or refuse to renew your policy due to wildfire risks if your area suffered a wildfire in 2019, 2020 and 2021. If you feel like your policy was wrongfully canceled, contact your state’s insurance commissioner's office for more assistance.

How Do Wildfires and Insurance Work?

Homeowners have several types of protections if their insurer covers fire damage from wildfires:

• Dwelling and other structures coverage: This coverage will insure your home’s structure plus external structures (e.g., sheds, fences, detached garages) if they catch fire.
• Personal property coverage: Personal belongings inside your home (e.g., electronics, clothes, furniture) are covered under standard home insurance. Your personal belongings are typically covered for 50% to 75% of your dwelling coverage limit.
• Loss of use coverage: Also called additional living expenses coverage, loss of use coverage pays for daily living expenses (e.g., renting a hotel, meals) if your home is temporarily unlivable due to a covered peril, which includes wildfires.
• Landscaping: Some home policies will have endorsements to insure trees, shrubs and plants if burned in the wildfire.

You are covered only up to the policy limits. If you have $250,000 in dwelling coverage but your losses total $350,000, you will be responsible for covering the remaining $100,000 out of pocket. Be sure to assess your home’s rebuild costs and the value of your personal belongings to ensure you are adequately covered.

Wildfire insurance is coverage for your home and personal property in case they are damaged or destroyed in a wildfire.

Scheduled Property Coverage May Be Worth the Added Cost

Certain valuables, like jewelry, furs and antiques, are reimbursable only up to the item’s sublimit even if your personal property coverage limit is higher.

Example: Say you have $100,000 in personal contents coverage, a $2,000 sublimit for jewelry and a $1,000 deductible. A wildfire completely devastates your home, including your $5,000 wedding ring. After paying your deductible, your insurer reimburses you for only $2,000 (your sublimit).

Adding scheduled property coverage to your policy can increase those limits to ensure your wedding ring is reimbursed at its replacement cost value. For homes with high-value contents, scheduled property coverage can be a good investment.

Does It Cost More To Live in Wildfire-Prone Areas?

Homeowners insurance companies will likely increase your insurance premiums if you live in a wildfire-prone area. Expect even higher premiums if you live in an area with a poor protection class.

What Is a Fire Protection Class?

Communities receive a fire protection class rank from one to 10 — one being the best score — based on how effectively the community can respond to fires. A superior score signals that well-trained, well-equipped and experienced firefighters are on standby with a generous water supply to combat wildfires. A high ranking community may therefore have lower home insurance premiums.

Some insurers may deny coverage for wildfires if your home is located in a wildfire-prone area.

A community can improve its score in several ways, including (but not limited to):

• Improving the quality of fire departments
• Increasing the availability of alternative water supplies
• Upgrading emergency communications (e.g., reporting and dispatching systems)

Unfortunately, there is little that the individual homeowner can do to improve their fire protection class. Improvements will require team effort with the community pushing for increased firefighting capabilities.

Properties at High Risk From Wildfire by State

Verisk analyzed the number of properties that are highly vulnerable to wildfire damages in the U.S. Among the most populous states, California and Texas had the highest number of high-risk properties.

State	Number of Properties
California	2,0040,600
Texas	717,800
Colorado	373,900
British Columbia	259,100
Arizona	242,200
Idaho	175,000
Washington	155,500
Oklahoma	153,400
Oregon	147,500
Montana	137,800
Utah	136,000
New Mexico	131,600
Nevada	67,100
Wyoming	36,800

Some states offer Fair Access to Insurance Requirements (FAIR) Plans to help homeowners who are denied standard coverage.

How To Protect Your Home From Wildfires

Wildfire season generally occurs in the hotter summer months. The tips below can help you, your family and home stay safe:

• Make firefighting tools accessible: Fire extinguishers, hoses and buckets should be easily reachable. Also learn how to safely operate these tools.
• Keep your trees and shrubs trimmed: Culling excess foliage and overhanging tree branches can help mitigate the spread of wildfire.
• Clear a safety zone around your home: Removing trees, leaves, pine needles and other foliage can help prevent the fire from reaching your home’s structure.
• Install smoke detectors: If you already have smoke detectors, ensure they are working properly.
• Clear debris: Clear dead leaves, sticks and other debris from your roof and rain gutters.
• Invest in fire-resistant roofing: Using a roof with fire-resistant materials can help mitigate damage to your home.
• Install dual-paned tempered glass windows: This investment can help prevent your windows from breaking from high heat, which may help prevent the wildfire from entering your home.
• Create a home inventory: Wildfires can cause significant damage to your home and belongings, making it difficult to quantify your actual losses. Itemizing all your belongings with pictures and receipts can save you tons of time when filing a claim for your damaged property.

Insurance Companies Are Helping Homeowners Protect Their Homes

Some insurance companies are helping their customers respond to fires more effectively. For example, State Farm has partnered with Wildfire Defense Systems, Inc., a wildfire risk mitigation company, to provide a completely free wildfire response endorsement to California homeowners. During a wildfire outbreak, Wildfire Defense Systems, Inc. will deploy a team to help mitigate the fire.

Insurance rates are generally higher in wildfire-prone areas or those in a poor fire protection class, communities lacking fire preparedness.

Wildfire Coverage Through Your State

Some states offer Fair Access to Insurance Requirements (FAIR) Plans to help homeowners who are denied standard coverage by insurance companies.

The California FAIR Plan is a last-resort home insurance alternative for those that do not qualify with traditional insurers because of their property’s high vulnerability to wildfires. The FAIR Plan is a named peril policy that insures the property specifically for fires, wildfires, lightning, smoke and internal explosions. Coverage for additional perils are available but at an additional cost. Unfortunately, personal liability insurance is not available in a FAIR plan.

If you’re having trouble finding insurance coverage, reach out to your state’s insurance commissioner to see what they can do for you.

Key Takeaways Standard home insurance will typically insure your home for fire and smoke damage from a wildfire. Some insurers may deny coverage if your home is located in a high-risk area for wildfires. Insurance rates are generally higher in wildfire-prone areas or those in a poor fire protection class. If you’re unable to find wildfire coverage in the private marketplace, reach out to your state’s insurance commissioner for alternative insurance options.

Home insurance is important to have. Wildfires can be devastating and the right coverage can reimburse your losses to your home and personal belongings. SmartFinancial can help you find a homeowners policy that meets your coverage needs and budget. Just enter your zip code below or call 855.214.2291 to receive your free homeowners insurance quotes.