Does Homeowners Insurance Cover Wildfires?

Find out if homeowners’ insurance covers wildfires, what’s included, and how to protect your home. Learn about wildfire insurance policies and risk factors.

Does Homeowners Insurance Cover Wildfires?

Homeowners’ insurance policies normally help to cover the costs of property damage due to wildfires. Generally, fire is considered a covered peril for standard policies. However, specific coverage can vary based on policy details and location.¹ Homeowners with property in areas that are more prone to wildfires might have to pay a higher premium or deductible for claims relating to wildfire damage.²

When are Polices Cancelled or Non-Renewed?

By regulation in most states, insurance policies cannot be written for more than a 12-month period. While used interchangeably, policy cancellations are distinct from non-renewals. Cancellations are when a homeowner loses coverage during the 12-month period of the policy.¹³ This is infrequent and often associated with errors on the policy application or other extraordinary circumstances. Non-renewal is the decision not to offer another policy when the current term lapses. This can happen for a number of reasons to include:

• Portfolio losses that cause a carrier to rebalance its portfolio.
• A carrier deciding to leave the market.
• A reassessment of regional risk due to wildfire activity.
• New parcel-level mitigation requirements that the home does not meet (described below under defensible space and home hardening).

What’s Included in Wildfire Coverage?

Dwelling Coverage

Pays to repair or rebuild a residence, within the coverage limits dictated in a policy. Of note, coverage limits often do not automatically rise over time which can result in under-insurance as the cost of replacement increases.

Other Structures Coverage

Pays for damages to detached structures such as sheds, garages, and fences.

Personal Property Coverage

Pays to replace personal items within a home, such as clothing, furniture, kitchenware, home goods, and electronics.

Additional Living Expenses

Pays for the cost of living somewhere else, including lodging and food, due to being evacuated or because a residence is uninhabitable. ^2,3

Liability Coverage

Covers damage to someone else’s property if a fire from your home spreads to neighboring homes and you are found legally at-fault.³

What’s Excluded in Wildfire Coverage?

Vehicles

If your vehicle is damaged during a wildfire, this falls under auto insurance and would be excluded from home insurance coverage.²

Negligence

Damage from wildfires that is the result of negligence on the part of the homeowner may be excluded, for example, if a homeowner is not performing regular maintenance, following safety regulations, or preserving defensible space.⁴

Business Losses

Financial losses due to interruption of business, or lost profits as a result of fire-related delays or disruption, may be excluded from coverage depending on the policy.⁵

Coverage Limits

Costs for repairing and rebuilding after a wildfire can also be excluded if they exceed policy limits. Maximum coverage limits exist for structures, personal property, and supplemental housing expenses, and the actual costs of these can end up being much higher due to outdated policies and increasing labor and material expenses.⁴

Does Renters Insurance Cover Damage Caused by Wildfires?

Renters’ insurance generally covers damage to personal belongings caused by wildfires, and additional living expenses sustained if a renter is displaced from their home due to damage or mandatory evacuation. Insurance policies can cover the cost of replacing or cleaning personal items, if damage is due to smoke.^4,6

When are Wildfire Claims Denied?

There are several reasons why a claim for wildfire damage may be denied:

• Lapse in coverage or payment of premiums.
• Wildfire coverage is not included in the existing policy.
• Insufficient documentation/proof of losses incurred due to wildfire.
• Deadline to file claims has passed.
• Property or home was restored without approval.
• Homeowner did not mitigate damage from wildfire.
• Insurance provider is not responsible for “Acts of God”.⁷

How Are Claims Settled in a Wildfire Insurance Case?

In the process of settling insurance claims in a wildfire case, several steps are involved:

1. Contact Insurance: The first step is to contact the insurance provider immediately to begin the claim process and find out any necessary details, such as how long homeowners have to file a claim, how long the claim process will take, and what needs to be provided as part of a claim.
2. File a Claim: The insurance company will provide the necessary forms for homeowners to complete in order to make a claim. Complete and return these forms within any required deadline.
3. Insurance Adjuster Inspection: An adjuster will likely visit the property to inspect and evaluate any damage, and determine the cost of repairs or rebuilding. To prepare for the adjuster, compile a list of damages to ensure they account for all areas and items affected.
4. Claim Settlement: The insurance company will review the evaluation and other evidence, and decide on a financial amount that they believe will cover the cost of damages.⁸ This may be paid in a lump sum, or divided into multiple payments. Payments may be made to the homeowner, or directly to the contractor(s) completing repairs.⁹
5. Appeal and Negotiation: If a homeowner does not agree with the initial settlement offer, they can appeal. With a formal written appeal, include additional evidence of damage, receipts, estimates, and any other documentation that supports the need for a higher settlement. Calculate what amount would be needed to sufficiently cover all costs, including repairs, replacements, and additional expenses. If desired, a property damage attorney can be contacted to assist with the process.¹⁰

Tips for Filing a Wildfire Insurance Claim

• Have any documents related to your insurance policy in a safe place, with copies stored at a location other than your home.
• Review your policy for any responsibilities on your part as a homeowner, including timelines or documentation requirements.
• Contact your insurance provider as soon as possible following the fire.
• Create photo and video footage of damage to any structures or personal property. Conducting a video walk through prior to an event can help show the pre-fire conditions.
• Don’t throw out any damaged items or start cleaning anything on your property until after everything has been assessed by an adjuster.
• Keep track of any expenses or receipts if you need to relocate to temporary housing.¹¹

How to Establish How Much Home Insurance is Needed

The most critical factor in wildfire insurance coverage is making sure your policy provides enough to fully rebuild your home. Your insurance company can help estimating rebuilding costs, but you will want to be sure that the policy’s value keeps pace with rising local building costs.¹⁴ Homeowners in high-risk areas may consider purchasing an extended or guaranteed replacement cost policy. After a wildfire, you may need temporary housing for an extended period, and it’s important to consider these costs when reviewing policies. Standard policies are often limited in coverage for items beyond the home itself, such as landscaping, outbuildings, and other structures. Homeowners should inquire about coverage for high-value features. It is best practice to review your policy at least once a year, and update it after home improvements, big purchases, or when construction costs in your area change significantly.

Wildfire Insurance for High-Risk Areas

Some insurance companies do not provide homeowners insurance for areas that are at a high risk of wildfire, or exclude wildfire damage from covered perils.^1,2 Homeowners in these areas can utilize specialized wildfire insurance or state insurance programs.

• Specialized wildfire insurance can provide higher policy limits, debris removal, landscaping, and additional coverage for existing gaps in standard insurance policies.⁴
• FAIR (Fair Access to Insurance Requirements) plans are state-mandated programs established to provide homeowners in high-risk areas with accessible insurance coverage. FAIR plan coverage and policy limits vary based on each individual state, and generally have a higher cost than standard private homeowners’ insurance policies.²
• Some state insurance departments offer their own high-risk programs for residents that cannot otherwise secure insurance that provides coverage for wildfire damages.⁴

How to Reduce Your Wildfire Insurance Risk

• Review insurance policies annually and update/increase coverage as needed.
• Purchase specialized wildfire insurance policies or endorsements if coverage is not provided in your standard insurance policy.
• Keep an inventory of personal belongings within your dwelling, including photographs, videos, and receipts for items of high value.
• Establish and maintain defensible space around your property to reduce the risk of wildfire spread.
• Complete home hardening improvements using fire-resistant materials to lower the risk of fire damage.⁴
• Surplus and Excess (E & S) carriers may offer policies in areas that admitted carriers will not underwrite.¹²

The following resources from WFCA provide additional information on home insurance and wildfires:

• Tips for Managing Insurance and Recovery after a Wildfire
• What Happens if Your House Burns Down in a Wildfire?
• Firefighter Insurance & Conference Recap