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Does homeowners insurance cover wildfire damage?

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Wildfires cause a significant number of insurance claims in the U.S. each year, thanks to the huge losses that just one fire can cause. The annualized economic burden from wildfire was estimated to be between $71.1 billion to $347.8 billion as of 2017, according to a report from the U.S. Department of Commerce, while the annualized losses are estimated to range from $63.5 billion to $285.0 billion. And, it’s only expected to get worse. According to a recent report, climate change and land-use change are expected to make wildfires more frequent and more intense, with an expected uptick of 14% by 2030. That risk will likely increase by 30% by the end of 2050, and by 50% by the end of the century.

What that means is that a lot more people, and a lot more homes, could soon be at risk of damage or losses from wildfires. If you’re concerned about the number of wildfires the U.S. experiences each year, you may be wondering if your homeowners insurance covers wildfire damage. Knowing whether or not your homeowners insurance policy covers wildfire damage can make a huge difference in the stress you experience during a wildfire season, which is why it’s important to understand what kind of coverage your homeowner’s insurance provides. By knowing what your homeowners insurance policy covers, you can make sure that you and your family are financially prepared in case your home becomes damaged or destroyed by a wildfire.

How does homeowners insurance cover wildfire damage?

Homeowners insurance policies usually cover damage caused by fires, including wildfires. Regardless of the type of homeowners policy you have, whether it is a standard HO-3 policy or a more comprehensive HO-5 policy, for example, damage caused by fire is typically covered.

Dwelling coverage and detached structures

Your home and detached structures on your property, such as a fence or detached garage, are usually covered for wildfire damage under your homeowners insurance policy. Your home is covered under Coverage A, dwelling coverage, while detached structures are covered under Coverage B, other structures coverage. Both of these coverage types have policy limits associated with them, so it’s important to review your insurance policy with a licensed insurance agent or homeowners insurance company to confirm your home is sufficiently covered.

Personal property

If your personal property, such as clothing and furniture, are damaged or destroyed due to a wildfire, it will likely be covered by your homeowners insurance policy. Personal belongings are covered under Coverage C, personal property coverage, and this coverage is usually set at 50% – 75% of your dwelling coverage.

If some of your belongings are not stored within the home, such as in a storage unit, your homeowners insurance policy usually offers a small percentage of personal property coverage if these items are also damaged. However, personal items used for business purposes or high-value items, such as jewelry or fine art, may not have the needed coverage for wildfire damage under a standard homeowners insurance policy.

Additional living expenses

Homeowners insurance also helps cover additional living costs if you are temporarily displaced from your home because of a wildfire. Known as loss of use coverage, or additional living expenses coverage, this coverage type can help cover expenses like hotel costs, restaurant or grocery expenses and pet boarding fees while your home is uninhabitable up to your policy limits.

When does homeowners insurance not cover wildfire damage?

Certain areas within the U.S. where homeowners have a higher chance of wildfire damage, such as California, may find it more difficult to get this type of coverage. Homeowners insurance companies may exclude wildfire damage on a standard insurance policy or be unwilling to write coverage at all in these high fire risk areas. If that is the case where you live, a Fair Access To Insurance Requirements plan, or FAIR plan, may be needed to have coverage in a wildfire-prone area.

How to prevent home damage from wildfires

Wildfires are a common occurrence in the United States. It’s important to know what your homeowner’s insurance covers, but it’s also important to take precautions for your home’s safety.

Here are some tips for keeping your home safe from wildfires and other types of fire damage:

  1. You should make sure that your home is properly equipped with a smoke detector and an extinguisher.
  2. Perform regular maintenance on your wood-burning stove or fireplace.
  3. Install sprinklers within your home.
  4. Keep all combustible materials away from open flames, such as a stovetop or fireplace.
  5. Clear brush and debris away from your home.
  6. Keep your gutters clear of leaves and other debris.

The bottom line

When it comes to your home, you need to be prepared for a wildfire. By taking steps to prepare, you can potentially minimize the damage that occurs to your home and be back on your feet as soon as possible. But protecting yourself from wildfire losses is hardly just limited to having a fire extinguisher on hand or knowing how to file an insurance claim. Understanding how your homeowners insurance coverage applies to wildfire damages, or does not apply in some cases, can help you prepare if you live in an area that’s at high risk for wildfires.

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