Understanding Wildfires and Insurance Claims Coverage
Resources and Information on Protecting Yourself From Wildfires
How Big is the Risk for Wildfire Damage to Homes?
Wildfires occur in 38 states. In the past 10 years, losses from wildfires have added up to over 5 billion dollars. Many housing developments are located near forests or areas prone to wildfire. These areas are known as the Wildland-Urban Interface (WUI), in the U.S. homes in the WUI include about 44 million houses. There are things people can do to help reduce the spread of wildfire to their property. Having insurance that will cover wildfire can help if your home, land, car or personal belongings are damaged by wildfire and you need to make an insurance claim.
Is Wildfire Damage Covered by Insurance?
Several types of insurance may cover damage by wildfire. Depending on the type of damage you have, the kind of policy you have, if you live in a high-risk zone or not, and what kind of property is affected by the wildfire, you may have coverages for:
- Dwelling: Covered by home insurance
- Additional Structures: Covered by home insurance
- Landscaping and backyard items: Covered by home insurance
- Additional Living Expenses, read more about this below
- Debris Removal: Included in a home insurance policy
- Personal Contents: Read more below
- Damage to Your Car: Covered if you have comprehensive car insurance
4.5 million homes are at high or extreme risk of wildfire in the U.S., with 2 million of these high risk homes in California, according to a 2017 Verisk Wildfire Risk Analysis.
What Coverage Does a Home Insurance Policy Have For Wildfires?
Standard residential insurance policies will cover damage from fire and smoke, therefore wildfire damage is normally included in the standard residential insurance policy coverage.
Note: Not all insurance companies will cover wildfire damage if you are in a high risk area, be sure and find out how your policy will protect you.
Home insurance may cover damage caused by fire or smoke to your building, additional structures, landscaping, backyard items, debris removal and personal contents.
Condo or Renters Insurance may provide you with coverage for your personal contents, as well as additional living expenses.
Is There a Limit to How Much Will Be Paid For a Wildfire Claim?
Since every insurance policy is different, the limits in your policy, as well as the exclusions, will be the deciding factors on how much you might be paid for a claim resulting from a wildfire.
Claims payment will depend if your basis of claims settlement is:
- On an actual cash value or replacement cost basis
- If you have guaranteed replacement cost on your dwelling, limited coverage or if you have enough insurance on your dwelling. If your home is underinsured, and you have a claim due to a wildfire, just like any other type of claim, you will not be paid what you need if you were underinsured.
- Exclusions of coverage or limits of insurance for your personal contents or landscaping, for example. Be sure and ask your insurance company if the limits apply in a fire claim, and ask about any additional coverage available to you. Sometimes you can purchase an endorsement on your policy to get the extra coverage you need.
Will Insurance Pay Living Expenses Like a Hotel to Stay In When You Have Damage Caused By Wildfire?
If your home is made uninhabitable by a covered risk, then you may be able to get compensation for your expenses. Additional living expenses is part of a homeowner, condo or renters insurance policy. This is the coverage you will need to be compensated for the increased cost of living due to a major claim or damage from a wildfire that makes your home uninhabitable. Learn more about additional living expenses coverage here.
The coverage is usually limited to a certain amount which you can find listed in your insurance policy. Some insurance policies for high-valued homes may offer unlimited additional living expense coverage.
Wildfire Damage to Cars––Is it Insured?
What Causes a Wildfire?
Wildfires can be caused by humans or by natural occurrences like lightning or lava. However, statistically, only about 10 percent of wildfires are caused by natural occurrences. According to the U.S. Department of Interior, humans cause approximately 90 percent of wildfires.
"Embers blown by wind cause most of the fires that burn down homes."
Tips on How to Reduce Wildfire Damage to Your Home
People may think that wildfire damage happens to a home located right in the forest or next to the fire itself, however, research has shown that embers blown by wind cause most of the fires that burn down homes.
Using certain fire deterrent or resistive materials in the construction of your home, as well as keeping a defensible space of 5-30 feet can help prevent spread of wildfire and protect your home. The Insurance Institute for Business and Home Safety recommends these useful tips to reduce wildfire damage to your home, this infographic is also very useful.
If you are in an area that is at high risk for wildfire, some insurance companies may not be willing to insure you.
List of Top Wildfire Claims States
Here is a list of the top states prone to wildfires from the Insurance Information Institute, California tops the list with over 2 million homes identified as being at high risk.
Do All Insurance Companies Insure You For Wildfire?
No, insurance companies have the right to decide where they are comfortable issuing insurance and will offer insurance based on their perceived risk. If you are in an area that is at high risk for wildfire, some insurance companies may not be willing to insure you. In cases like this you may need to look at a Fair Plan home insurance option. In California, for example, people may be able to get wildfire insurance coverage through the California Fair Plan.