Do You Need Wildfire Insurance?

Wildfires are becoming a growing concern across the U.S. Here’s how to cover your home and property against damage.

Written by Erin Gobler / January 31, 2022

Quick Bites

  • Wildfires have been increasing in recent years, and 2020 in particular was a record-breaking year for wildfire insurance losses.
  • Standard homeowners insurance covers losses due to wildfire for your dwelling, personal belongings, additional living expenses and landscaping.
  • Homeowners insurance may not cover all expenses related to wildfires, such as evacuation costs and indirect damage caused by wildfires.
  • A FAIR Plan—short for Fair Access to Insurance Requirements—helps homeowners in high-risk areas find affordable insurance.

If you live in an area prone to wildfires, then you probably know the fear that comes with owning a home that could be damaged or destroyed with little warning. Losing your home in a wildfire is no doubt emotionally traumatizing, and, unfortunately, if you don’t have the right insurance coverage, it can be financially distressing as well.

Wildfires may not be top of mind for many homeowners unless you live in a high-risk area of the country. However, those areas are growing and fire season is lengthening due to changing weather conditions.[1] In fact, fire and lightning account for roughly one-quarter of homeowners insurance losses, making wildfire one of the most common hazards.[2]

To further drive the impact home, 2020 was a record-breaking year for wildfire insurance losses. Western wildfires in the U.S. cost insurers as much as $13 billion in insured losses in California, Colorado, Oregon and Washington alone.[3]

“A standard homeowners insurance policy will cover damage or loss of your dwelling and other structures due to wildfire,” says Brian Tausan, an insurance agent with Country Financial in Denver. However, with more than 4.5 million homes in the U.S. now considered at high or extremely risk of wildfire, it’s important to understand exactly what your homeowners insurance policy will cover.[4] Keep reading to learn what type of protection is best for you.

Inside this article

  1. Standard wildfire coverage
  2. Coverage details
  3. What’s not covered?
  4. What about high-risk areas?

How much wildfire coverage does homeowners insurance carry?

There’s certainly some anxiety that comes with knowing you could lose your home to a wildfire. But it might bring you some comfort to know that the hazard is covered under a standard homeowners insurance policy—meaning even if you don’t have special wildfire insurance, you do have some protection.

In addition to your dwelling, “your personal property, landscaping and the additional living expenses you incur while you wait to return home or rebuild are also covered,” says Tausan, “usually at a percentage of your dwelling coverage.”

If your home is damaged by a fire, you should file a claim with your insurance company immediately. The sooner the company receives your claim, the sooner they can process it.

Coverage details

What exactly does wildfire coverage in a homeowners policy entail? Here’s a list of what you can expect. Keep in mind that while homeowners insurance does offer coverage for wildfires, the amount it will cover depends on your policy. Make sure to check that your coverage limit is high enough to fully rebuild your home.

The structure of your home: First and foremost, your homeowners insurance policy will cover the cost of repairing or replacing your home itself if it’s damaged by a wildfire.

Your personal belongings: Not only does homeowners insurance cover the structure of your home, but it also covers your personal items within the home.

Additional living expenses: If you have to stay somewhere else while your home is being repaired or rebuilt, insurance will cover your increased living expenses, such as those required to rent a hotel or apartment until you can return home.

Landscaping: Homeowners insurance often covers trees, shrubs and other landscaping on your property, since anything in your yard is also likely to be destroyed if there’s a fire.

Tip: According to Brian Tausan, an insurance agent with Country Financial in Denver, the rising cost of homebuilding makes it more difficult to keep your insurance coverage up-to-date. But with the right policy, you can make sure you’re covered no matter what. “It’s a good idea to check with your agent to see if you have additional replacement cost coverage, which includes labor and construction materials with no limits and accounts for inflation,” says Tausan.

What’s not covered?

Make sure to read your policy carefully: While homeowners insurance technically does cover fires, some expenses may not be included. For example, your insurance may not cover damage caused indirectly by a fire.

“Regarding hazards related to wildfires, homes in mountainous areas can be at risk to landslides, especially if there is a lack of vegetation, which is often a result of wildfires,” says Tausan. “Landslides are characterized as earth movements and are not covered under a standard homeowners insurance policy.” Instead, a special policy called “Difference in Conditions” is required in this instance.

Additionally, many homeowners are forced to evacuate their homes during a fire in case it heads their way. But during this time, homeowners insurance isn’t likely to cover their additional living expenses—at least not until the home has actually been damaged by the fire.

“A standard homeowners policy offers additional living expenses coverage in the event there is damage to your home and you have to live elsewhere for a period of time,” says John Bachmann, Vice President of Client Relations for Norwood Insurance Agency. But your policy may not pay for additional living expenses (ALE) if there’s no damage to your home, even if it’s required by a local authority. Be sure to check the ALE coverage on your policy to see what the exact terms are.

Is wildfire insurance affordable for people in high-risk areas?

As insurance losses related to wildfires increase, it’s becoming more difficult for homeowners in fire-prone areas to find affordable insurance. “Insurance companies rate policies based on the risk of the property suffering a loss,” says Bachmann. “Therefore, properties in wildfire risk zones may pay higher [premiums], similar to how properties on the coast may pay higher premiums due to the risk of flooding.”

Not only can insurance carriers charge more for homeowners insurance policies in high-risk areas, but they may also simply stop offering them. In fact, many homeowners have been denied coverage due to their risk of a wildfire. In that case, there are other options:

Your State’s FAIR Plan

A FAIR Plan—short for Fair Access to Insurance Requirements Plan—makes it easier for homeowners in high-risk areas to find the insurance they need. These plans cover many of the same perils as traditional homeowners insurance, while others cover only specific named perils. For example, California’s FAIR Plan covers fire and lightning, internal explosion and smoke, with other perils available for an added cost.[5]

Premium Homeowners Insurance

A high-value homeowners insurance policy through a premium insurance company is another way to find coverage. There are carriers out there that offer this coverage to high-value homes. Keep in mind that this type of policy is likely to come with a higher price tag than traditional homeowners insurance.

Excess and Surplus Lines Insurance

Excess and surplus lines insurance covers hazards that may be too high-risk for other insurance companies. In many parts of the country, this includes homes at risk for wildfires. Keep in mind that it is likely to be more expensive than traditional homeowners insurance but available to those who may not be able to get a standard policy.

Article Sources
  1. Deb Schweizer, “Wildfires in All Seasons?” USDA Forest Service, July 29, 2021, https://www.usda.gov/media/blog/2019/06/27/wildfires-all-seasons.
  2. “Facts + Statistics: Homeowners and renters insurance,” Insurance Information Institute, https://www.iii.org/fact-statistic/facts-statistics-homeowners-and-renters-insurance.
  3. Matthew Lavietes, “Western U.S. wildfires cost insurers up to $13 billion in 2020,” Reuters, Dec. 15, 2020, https://www.reuters.com/article/us-usa-wildfires-insured-losses-trfn/western-u-s-wildfires-cost-insurers-up-to-13-billion-in-2020-idUSKBN28P2NQ.
  4. “Verisk Wildlife Risk Analysis,” Verisk Analytics, https://www.verisk.com/insurance/campaigns/location-fireline-state-risk-report.
  5. “Dwelling Property Types Covered,” California Fair Plan Property Insurance, https://www.cfpnet.com/policies/dwelling.

About the Author

Erin Gobler

Erin Gobler

Erin is a personal finance expert and journalist who has been writing online for nearly a decade. Erin’s work has appeared in major financial publications, including Fox Business, Time, Credit Karma, and more.

Full bio

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