Home insurance can help cover the cost of repairing or rebuilding a home after an unexpected event, including a wildfire. Approximately 59,000 wildfires occurred nationwide in 2021, burning a total of 7.1 million acres and nearly 6,000 structures. Of those structures, 60% were residences.
Wildfires in Western states tend to burn more acres than fires in other parts of the country. Some of the states with an elevated risk of wildfires include California, Texas, Colorado, Montana, and Idaho. However, the majority of states recorded wildfires in 2021, so regardless of their home’s location, Americans may be interested in how home insurance works for wildfires.
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Does Homeowners Insurance Cover Wildfire Damage?
Yes, standard home insurance policies provide coverage for fire damage, including wildfire damage. This may include damage to the structure of the home and its contents, as well as additional living expenses a homeowner incurs when their home is uninhabitable. However, in wildfire-prone areas, home insurance options may be limited or subject to exclusions and conditions:
- No coverage or non-renewals: In some areas with a high risk of wildfires, insurance companies may decline to sell home insurance policies there entirely. Insurers may also decide not to renew existing home insurance policies because of wildfire risk. That means policyholders would lose coverage at the end of the policy term.
- Specific exclusions for wildfires: Insurance companies that do offer home insurance policies in wildfire-prone areas may specifically exclude wildfire damage. This exclusion means homeowners are responsible for the cost of any wildfire-related incidents and damages.
- Conditional coverage for wildfires: Home insurance that includes wildfire coverage could be subject to conditions in some areas. For example, insurance companies may require homeowners to take specific steps to reduce their risk of wildfire damage. This could include removing dead vegetation or cutting down trees.
Dwelling Coverage for Wildfire Damage
Dwelling coverage is the part of a standard home insurance policy that covers damage to the structure of a home and any structure attached to the home, such as a garage or carport. It could help homeowners pay for repairs their home needs if it’s damaged by a wildfire. It could also help pay to rebuild a home destroyed by a wildfire.
This coverage may include both damages caused by the fire itself, such as a collapsed roof, and wildfire-related damages, such as smoke stains on walls or water damage caused by firefighters.
Personal Property Coverage for Wildfire Damage
Personal property coverage is the part of a home insurance policy that covers the contents of a home. It could help homeowners replace personal possessions destroyed by fire or damaged by smoke or firefighting efforts. Covered possessions may include:
- Furniture
- Appliances
- Electronics
- Clothing
- Housewares
- Sporting equipment
Home insurance policies may cap coverage for jewelry or other valuables at a set dollar amount, such as $1,500 per claim. Homeowners who want to insure valuables at their appraised value could purchase a rider for the policy, such as a valuables rider or scheduled personal property rider.
Loss of Use Coverage for Wildfire Damage
Loss of use coverage can help homeowners pay for living elsewhere while their home is repaired or rebuilt after a wildfire. Some policies also cover loss of use due to a mandatory evacuation, even if the home is not damaged or destroyed.
Loss of use coverage is designed to cover additional living expenses. That means it does not cover mortgage payments, property taxes, or other ongoing expenses that you would have even if your home were not damaged. However, loss of use typically helps reimburse for hotel bills, storage fees, and other extra costs incurred because you cannot live at home.
What If Your Home Insurance Does Not Cover Wildfires?
Homeowners in areas prone to wildfires may have trouble finding a home insurance policy that covers these disasters. However, even if your existing insurer does not cover wildfire damage, another company might provide that coverage. Contact your state’s Department of Insurance to learn more about wildfire coverage options in your area, or work with an insurance agent to find a policy that covers wildfire damage in your area.
Fair Access to Insurance Requirements (FAIR) Plans
Fair Access To Insurance Requirements (FAIR) plans are an insurer of last resort for homeowners who’ve been denied wildfire coverage. FAIR plans are run at the state level, so coverage details can vary.
For example, California’s FAIR plan offers coverage for wildfire-related perils traditional policies may exclude, including fire, smoke, lightning, and internal explosion. Homeowners who are not able to buy home insurance could supplement their FAIR plan policy with a Difference in Conditions (DIC) policy. Together, a FAIR plan policy and a DIC policy may provide similar coverage to a traditional home insurance policy.
Since FAIR plans are designed for homes with an increased risk of wildfire damage, they may have higher premiums than traditional home insurance and offer less coverage. FAIR plan policyholders may also be required to make home improvements or upgrades to reduce wildfire risk to maintain coverage.
Why Have Wildfire Insurance?
Wildfires can bring significant financial costs to affected areas. For example, the 2021 Western wildfire season caused $10.6 billion in damages. That year, California’s Dixie Fire destroyed more than 1,000 structures, while in Colorado, the Marshall Fire damaged or destroyed over 1,000 structures.
Home insurance policies that include wildfire coverage could help homeowners pay to repair or rebuild their homes after a fire. This can help homeowners protect their finances from the impacts of these destructive events. Costs could include debris removal, foundation inspections, and permits to rebuild before even getting to the cost of actually rebuilding the home.
Costs can vary based on location, but after the Marshall Fire, rebuilding estimates for Denver-area homeowners were around $300 to $350 per square foot. Wildfire insurance could help you better manage these types of costs. Even when a home is not burned down, there are costs for getting smoke odors out of furniture and carpeting, or repairing a foundation that’s been cracked by heat, or fixing structural problems.
General Protection You Can Do for Your Home Against Wildfire Damage
Homeowners who live in areas that are prone to wildfires can take a number of steps to protect their homes from fire damage:
- Create a fire-resistant landscape. To reduce fire spread, remove dead vegetation from your yard, and trim tree branches that overhang your roof or deck. Surround the home’s perimeter with non-combustible landscaping features, like patios or walkways. Encourage your neighbors to do the same.
- Make fire-resistant home upgrades. To help your home withstand wildfires, consider retrofitting it with non-combustible siding or a Class A fire-rated roof. Replace single-pane with double-pane windows, and consider installing non-combustible shutters.
- Take precautions if fire approaches. When evacuation is possible, simple steps like shutting off the gas at the meter or moving flammable objects away from windows could improve your home’s wildfire defenses. However, as fires can move up to 14 miles an hour, be sure to prioritize your own safety and follow evacuation orders.