by Jason Metz, Forbes Advisor 

The wildfires tearing through California, Oregon and Washington show that fires can be just as unpredictable as an earthquake or tornado: Starting without warning and moving so quickly that it can be impossible to get out of their way.

Wildfires are most often associated with western states, but they can happen anywhere. On average, more than 2,500 homes in the U.S. are destroyed every year due to wildfires, according to the National Interagency Coordination Center’s (NICC) 2019 annual report. The NICC tallied “significant fires” in more than 30 states.

The No. 1 cause of wildfires? People. About 85% of wildfires in the U.S. between 2000 and 2017 were caused by humans, according to data from Wildland Fire Management Information and U.S. Forest Service Research Data Archive. People do careless things like leave campfires unattended, burn debris, improperly use equipment (or use malfunctioning equipment), discard cigarettes in unfortunate places and commit arson.

Another leading cause of wildfires? Lightning. A thunderstorm can spark a fire.

With fires along the West Coast raging out of control, you might be wondering how insurance can protect your property and finances in the face of such devastation.

Does Homeowners Insurance Cover Wildfire Damage?

A homeowners insurance policy will cover damage from fire, including wildfire. If your house is damaged by a fire, the policy has several coverage types to help repair or rebuild the home, replace belongings and, if necessary, pay for temporary housing if you can’t live in the home.

Dwelling Coverage

This coverage pays to rebuild or replace the physical structure of the home and attached structures, like a deck or garage. You’ll be covered up to the policy limits, which is typically based on the amount it would cost to rebuild the entire house, based on materials and local labor costs.

If you haven’t recently reviewed your homeowners insurance policy or you’re not sure how much home insurance you need, now is a good time to take a look at it. That’s because you want your dwelling coverage to keep pace over time with the changing costs to rebuild the house.

Top 10 Metropolitan Areas for Wildfire Risk, Ranked by Reconstruction Costs

Other Structures

“Other structures” are items not attached to your house, such as a detached garage, shed or fence. This coverage type is often based on a percentage of your dwelling coverage. For example, your coverage for other structures might be set at 10% of your dwelling coverage. If you have $250,000 in dwelling coverage, you would have a $25,000 limit for other structures.

If you recently added any structures, like an in-ground pool or gazebo, it’s a good idea to review your policy. Speak with your insurance agent if you need to buy more coverage.

Personal Property

Your personal belongings, such as furniture, kitchen appliances, electronics and clothes, fall under this coverage. Policy limits are usually set between 50% to 70% of your dwelling coverage. For example, if you had $250,000 in dwelling coverage and your personal property coverage is set at 50%, you would have $125,000 for your belongings.

A good way to determine if you have enough personal property coverage is by making a home inventory. Basically, list all of your stuff and how much it would cost to replace it if your home was destroyed by a fire. You can buy more personal property coverage if your current insurance limits are too low.

Additional Living Expenses

If you can’t live in your home because of damage caused by a wildfire, additional living expenses (also known as “loss of use”) pays for expenses like a hotel stay, restaurant bills and other costs, such as pet boarding fees and laundry services. You can also make claims on this coverage if local authorities require you to evacuate—even if the fire never reaches your house.

Additional living expenses coverage is typically set at a percentage of your dwelling coverage. For example, if your additional living expenses coverage is 25% of your dwelling coverage and you have $250,000 in dwelling coverage, you would have up to $62,500 for loss of use. You can also increase this limit if you want to.

Trees, Shrubs, Plants and Lawns

A home insurance policy typically covers items like trees, shrubs, plants and lawns up to a certain percentage of your dwelling coverage. For example, if you had 20% coverage for these types of items and $250,000 in dwelling coverage, you would have up to $50,000 to replace these items.

But take a close look at your policy’s special limits. For example, we looked at an Erie Insurance policy that does not pay more than $1,500 for any one tree, shrub or plant.

Does Condo Insurance Cover Wildfires?

Typically, a condo insurance policy covers wildfire damage to the “inside walls” of a condo. Your homeowners association’s (HOA) “master policy” covers the exterior of a condo, like the outside walls and roof. Here are the coverage types that can help you repair the inside of your condo and replace your personal belongings.

Interior Walls

What’s covered by your condo insurance policy and the HOA master policy will depend on the type of the master policy:

  • If it’s an “all-in” master policy, items such as appliances, carpets, electrical wiring and plumbing are covered.
  • If it’s a “bare walls” master policy, nothing within the condo unit’s walls will be covered (although some bare walls might cover electrical and plumbing).

“Interior walls coverage” pays to repair or replace damaged items within the inside walls of your condo not covered by the HOA master policy. For example, if your HOA has a bare walls policy, it wouldn’t cover cabinets and built-in bookshelves. But interior walls coverage would help repair and replace these items.

Personal Property

As with homeowners insurance, this coverage pays to replace items like electronics, furniture, jewelry and other types of items. Your coverage is limited by an amount you select.

Keep in mind, an HOA’s master policy won’t cover your personal belongings, so you want to be sure you have adequate coverage for your stuff.

Additional Living Expenses

As with homeowners insurance, “loss of use” in a condo insurance policy pays expenses like hotel bills, meals and other services, such as laundry or pet boarding, if you can’t live in the condo because of damage caused by a fire. You can also tap this coverage if there’s a mandatory evacuation in your area.

Does Renters Insurance Cover Wildfire Damage?

A standard renters insurance policy also covers damages caused by wildfires. This will include your possessions and even “additional living expenses” or “loss of use.” A landlord’s insurance policy won’t cover your personal items or expenses like lodging and meals.

Depending on your renters insurance policy, the coverage for additional living expenses could be a set amount, such as $3,000 to $5,000, or it could be set at a certain percentage of your personal property limits. For example, if your additional living expenses coverage is set at 30% of the personal property limits, and you have $25,000 in personal property coverage, you would have up to $7,500 for additional living expenses.

What if I Live in an Area with Wildfires?

If you live in a geographic area that has a high risk of wildfires, you might have a tough time finding affordable homeowners insurance. Some insurance companies will charge higher premiums, increase deductibles, cap payouts or, in some cases, decline to write insurance policies for homes in high-risk areas, such as parts of California.

If your insurance has high premiums or you’re having difficulty getting the right coverage, it’s a good idea to shop around. Not all insurance companies offer the same types of coverage or charge the same rates. Work with an independent insurance agent who is familiar with the insurance companies in your area.

If you can’t find homeowners insurance, you might need to turn to your state’s Fair Access to Insurance Requirements (FAIR) Plan. But before you can get a policy through a state’s FAIR plan, you usually need to be declined by a certain number of insurers first. For example, in California, you can only get insurance from a FAIR plan if you’ve been rejected three times by insurance companies.

Insurance through a state FAIR plan isn’t ideal. Plans can be expensive, have lower coverage and may have restricted coverage, meaning you might have to purchase other coverage types (such as liability insurance) from a private insurance company in order to get comprehensive homeowners coverage.

Insurance through a FAIR plan is usually a last resort, so it’s worth your time to shop around and work with an independent insurance agent.

Fire Protection Services from Home Insurance Companies

A handful of homeowners insurance companies offer fire protection services for policyholders in wildfire areas. These plans are generally offered only to customers with high-value properties. Here are a few examples:

AIG Private Client Group Wildfire Protection Services

AIG offers this complimentary service to customers in certain high-risk areas in the U.S. The goal is to pre-empt wildfire damage before it happens. The service includes:

  • At-home consultation: Wildfire protection specialists visit the property and assess its vulnerability. In some cases, they can apply an environmentally friendly fire retardant around the perimeter of the property.
  • Ongoing monitoring: Specialists track fire behavior, conditions and direction to identify at-risk properties.
  • Wildfire mitigation: If access is permitted during a wildfire, specialists can remove combustibles from your property and apply fire retardant to the perimeter.

Chubb Wildfire Defense

Chubb partnered with Wildfire Defense Systems  (WDS) to help protect customers’ homes in select high-risk areas. Chubb’s service includes:

  • Year-round service: Specialists will assess a home’s risk and recommend ways to protect your home.
  • Protecting homes during a wildfire: If necessary, Chubb will deploy certified fire professionals to your home if a wildfire threatens the area. The team might remove combustible materials and apply fire-blocking gel to the house.
  • Recovery after the wildfire has passed: This might include returning any combustible items that were removed from your property and removing fire-blocking gel from the home.

PURE Programs High Wildfire Risk Homeowners Insurance Program

If you own a high value home in California with a rebuilding cost over $1 million, you may be eligible for coverage through PURE Programs. PURE fire services include:

  • Risk management: Your property will be inspected for any vulnerabilities and you’ll get expert advice to better safeguard your home.
  • Emergency response services: During an active wildfire, PURE Programs will keep you informed on the wildfire’s movements and, if necessary, dispatch emergency trucks and crews to help protect the home.

Frequently Asked Questions

Can I get a homeowners insurance discount if I use fire safety devices?

You might be able to lower homeowners insurance costs if you take steps to safeguard your home against fires. Some insurance companies offer discounts if you have smoke detectors and fire extinguishers on every floor and install a fire alarm system.

If you have a home sprinkler system, you might qualify for a discount as much as 35%, according to the Home Fire Sprinkler Coalition.

What if a wildfire damages my car?

If a wildfire damages your car, file a claim under the comprehensive insurance portion of your auto insurance policy. Homeowners, condo and renters insurance won’t cover wildfire damage to your car.

How much insurance do I need to protect my property against wildfires?

How much home insurance you need in case of a wildfire depends on several factors, like the cost to rebuild the house and replace your personal belongings. It’s a good idea to regularly update your dwelling coverage to keep up with local labor and material costs. You can make a home inventory to get an idea of whether personal property coverage amount is adequate in the event of a devastating fire.

You’ll also want to remember your “additional living expenses” coverage if a fire forces you to temporarily stay in a hotel while your home is being repaired, or if you’ve been ordered to evacuate by local authorities.

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