You may be unable to find homeowners insurance in an area that is prone to fire. Consider looking at surplus line carriers, private carriers or the state’s plan.
It can be difficult to find homeowners insurance in areas where there are frequent fires. In West Coast fire-prone areas, some insurers have stopped renewing or cancelling policies. It is becoming harder to find homeowner’s insurance, but it is important that you do not get caught without it. You could end up paying hundreds of thousands for repair, rebuild and replacement costs.
There are several options for homeowners who cannot get home insurance through a standard provider because of their location. The This Old House Reviews Team has put together a list of options that you have when standard insurance is not available. Surplus line carriers may be an option. Homes with a maximum value of $1 million could be eligible for coverage under AIG and Chubb. Homeowners can also turn to the state’s insurance safety net as a last resort.
These options are often less available and more costly than traditional homeowners insurance policies. It can save your biggest investment but it is worth it.
Wildfire damage is covered by homeowner’s insurance
Fires are covered by most home insurance companies. Your insurance company will cover the costs of rebuilding your house and any other structures. They also help you to live temporarily outside your home if your home is damaged by fire, electrical problems, or arson.
In a fire-prone region, homeowners insurance policies will usually cover the following:
- Dwelling: Covers the cost of repair and reconstruction. This should be equal to the cost of rebuilding your home using current labor and construction costs. These costs can rise after disasters so your limit might not be sufficient. This can be prevented by purchasing a guaranteed replacement costs endorsement. This covers all reconstruction costs. You also have the option to purchase an extended replacement cost endorsement which will extend your coverage by 25-500%. It is important to include the cost of any home improvements.
- Other structures: Contributes up to 10% towards the repair or rebuilding of detached structures such as sheds and garages.
- Personal property: This helps to cover the cost of replacing personal items like clothing, jewelry, and appliances. This covers approximately 50% of the dwelling coverage limit. Preparing for this is as easy as taking a detailed inventory of your belongings, and then recording it on video.
- Loss of use/additional expenses: This helps to cover living costs outside your home like fuel, lodging and dining because of a covered loss.
Due to the high risk of fire, homeowners who live in areas prone to fire are not eligible for standard home insurance. There are other options.
What is the problem with homeowner’s insurance in fire-prone areas?
In recent years, record-breaking wildfires have prompted homeowners insurance companies to reconsider the risk of insuring homes located in areas prone to fire. These areas are not covered by traditional insurers, while others have stopped renewing their policies. Insurance companies don’t want to be held liable, and the dry season is getting longer while the wet season is getting shorter. According to the Institute of Insurance Information, wildfires were responsible for $18 billion of insured losses in 2018 compared with $15 billion in 2017.
Verisk’s 2019 Wildfire Risk Analysis found that 4.5 million American households were at high or extreme wildfire risk. The National Interagency Fire Center data shows that there were 41.051 wildfires between January 1 and September 8, 2020, compared to 35.386 wildfires during the same time period in 2019.
How to get homeowner’s insurance in fire-prone areas
If standard homeowners insurance is not an option, there are many ways to insure your home in a fire-prone location.
The FAIR plan in your state
FAIR (or Fair Access to Insurance Requirements) Plans are available in most states as an option. California’s FAIR Plan provides coverage for up to $1.5 million of personal and dwelling property.
FAIR Plans do not cover theft or water damage. Personal liability and medical payments are usually excluded from coverage. To ensure that there are no gaps in coverage, homeowners can purchase a Difference In Conditions policy to supplement their coverage.
FAIR Plans can be twice as expensive as homeowners insurance policies. Other options may be more costly.
AIG and Chubb, two of the most prestigious insurance companies, offer home insurance plans that cover wildfire damage. This type of homeowners insurance is usually only available for homes valued over $1 million.
Carriers of surplus lines
Surplus line carriers offer insurance for homes that traditional home insurance companies won’t insure because of the high financial risk. Because they don’t have to comply with state regulations, they can take on the risk. Surplus line carrier plans are more expensive than standard homeowners policies.
How to Protect Your Home in Fire-Prone Zones
Wildfires can cause severe damage. There are steps you can take to reduce the damage to wildfires if you live near one.
- Your house should not be built closer than 15 feet from any neighboring houses
- Noncombustible siding and roofing are available
- Confirm that your home is within six inches of the ground to the siding distance
- Install non-flammable gates
- Clean gutters
- Take away any debris from your roof
- Prune branches
- Remove all shrubs, foliage, and dead plants from your home.
Most Frequently Asked Questions
Is there a way to get homeowners insurance for high-risk residents?
You can qualify for high-risk homeowners insurance through your state’s FAIR Plan. This home insurance policy is for last resort. You can also search for the top high-risk homeowners’ insurance companies close to you.
Is homeowners insurance able to cover fire?
Many homeowners insurance policies include fire protection. This means that your policy will cover the cost to repair or rebuild your home and your personal property. It also covers temporary living expenses, such as fuel, lodging, or dining.
What areas aren’t covered by homeowners insurance?
Most major homeowners insurance companies do not cover many fire-prone areas along California’s West Coast.
What does homeowners insurance cover in California for fire?
California homeowners who live in high-risk areas may need to buy supplemental insurance to protect against fire damage.