What you need to know about wildfire insurance in California

California is known for its beautiful beaches, Hollywood stars, and carefree culture. However, more than 4 million acres were destroyed by wildfires in 2020. According to the California Department of Forestry and Fire Protection annual statistics, 2020 has more than doubled California’s previous record for wildfires per year. These wildfires are responsible for billions in damage each year. The estimated cost of these damages is $10 Billion as of October 2020.

Residents in California have to be aware of how homeowners insurance can help them when wildfires occur. You can make sure you have wildfire insurance to cover the expenses associated with a California wildfire by taking the time to read your policy.

What is the cause of California wildfires

According to the National Park Service in the United States, approximately 85% of wildfires are caused by humans. These are the most common causes of wildfires:

  • Burning debris
  • You can’t throw out cigarettes that have been discarded in haste
  • Equipment failures
  • Intentional arson
  • Campfires left unattended

Lightning bolts can also be used to start wildfires, if they are prolonged for an unusual amount of time. Dry lightning strikes were especially important in the record-breaking California wildfires of 2020. The state’s dry, hot climate only fuelled the 14,000 dry lightning strikes which ignited flame after flame in 2020.

Finding affordable homeowners insurance can be difficult in California, where there is a high chance of wildfires. Insurance companies charge for coverage based on the risk they take by signing you up as a policyholder. Some insurance companies will increase premiums, raise deductibles, cap payouts or deny coverage for homes located in high-risk areas.

Is home insurance available to cover wildfires

Standard homeowners insurance policies cover fire damage from wildfires. Many coverage options are available to help policyholders pay for the repair or replacement of their home or personal property.

Coverage for dwellings

This coverage covers the costs of rebuilding or replacing your home’s physical structure and any attached structures after a wildfire, such as decking or attached garages. Although coverage amounts can vary, most policies limit the amount that it would take to rebuild your entire home using local materials and labor costs. These costs can change with inflation and other economic factors. You can refer to your policies to determine your policy limit and talk to your agent to learn how to get more coverage.

Coverage for other structures

Like dwelling coverage, “other structure” coverage covers the cost of rebuilding or replacing unattached structures that are damaged by wildfires. This includes sheds, detached garages and fencing.

Coverage for other structures is typically based on a percentage or your dwelling coverage. For example, if your dwelling coverage is $300,000, and your coverage for other structures is 15%, then your limit for other structures would be $45,000 It is a good idea to check your homeowners insurance policy before adding any structures to your home.

Protection for personal property

Your dwelling and other structures coverage doesn’t cover items such as furniture, kitchen appliances, or electronics. However, personal property coverage does. Personal property coverage policy limits typically cover between 50 and 70% of your dwelling coverage limit. If your dwelling coverage has a $300,000.0 limit, and your personal property policy limit exceeds 60%, then you will have $180,000 coverage for your belongings.

It is a good idea to do a home inventory to see what your possessions are worth and how much it would cost to replace them if they were lost in a California wildfire.

Loss-of-use coverage

This coverage, also known as “additional Living expenses”, covers expenses such as hotel stays, meals, and any other costs related to your inability to live in your home because of a wildfire. California residents who have loss-of-use coverage may file claims with their providers in the event that authorities ask them to evacuate. The coverage limits for loss-of-use policies vary depending on how much dwelling coverage your insurer uses. The policyholder can increase these limits as necessary.

Does Condo Insurance Cover Wildfires?

Condo insurance policies usually cover wildfire damage to your living space’s interior walls. Your homeowners association’s master insurance should cover the exterior of your condo. There are many coverage options for condo insurance policies that will cover personal property damaged by wildfires.

Interior wall coverage

You may have coverage for certain items depending on what type of master policy you have with your HOA. A “all-in” master insurance policy covers things such as appliances, carpets and electrica. However, a “bare walls” policy will not cover anything within the unit’s walls.

You will be able to use your insurance to cover the cost of replacing or repairing damaged items in your condo’s interior walls. This coverage is not available through the HOA master policy. If your HOA has a policy that covers only the walls, then it will not pay for kitchen countertops that have been damaged by wildfires. You would be able recoup the costs of replacing these items if you have interior walls coverage.

Protection for personal property

Personal property coverage, just like homeowners insurance, allows condo owners to claim the cost of replacing personal items such as jewelry, furniture and appliances. The policyholder sets the dollar limit for coverage.

Even if your HOA master policy covers all of your property, it will not cover personal property. To ensure that you have adequate coverage for your belongings, check your existing coverage with your condo insurer.

Additional living expenses coverage

This option, like homeowners insurance, covers expenses that result from being evacuated from your condo by a wildfire. If you have chosen additional living expenses coverage, your insurance provider can cover expenses such as hotel stays, meal bills, pet boarding, and laundry services. Californians can file a claim if they are asked to evacuate, even if the fire does not reach their condo.

How can you get insurance for common wildfire areas

Some insurers might deny homeowners who live in high-risk wildfire areas. This is particularly common in California’s Los Angeles, San Diego and Sacramento areas. There are several options for homeowners to get coverage if this happens.

The FAIR Plan

The Fair Access to Insurance requirements (FAIR) Plan, a state-mandated program, provides insurance products to individuals who live in wildfire-prone areas. If they are residents of California, and meet certain requirements for building construction, state residents may apply for this plan.

The FAIR Plan offers coverage options for high-risk properties, but residents might want to explore all the options on the voluntary market. FAIR Plans are more costly and offer fewer coverage options. They also have lower policy limits. California FAIR Plan, for example, does not offer replacement cost dwelling or personal property coverages. The plan does not include:

  • There are no plans for repairing damaged houses
  • Homes that are vacant or unoccupied for a long time
  • Federally illegal means such as the cultivation of marijuana are used to acquire properties

Carriers of excess or surplus lines

Residents may also be eligible for homeowners insurance through an excess or surplus line carrier. These insurers offer coverage for homes that are not covered by the standard market. Surplus lines are not subject to the same state regulations as standard carriers, which makes them more expensive than homeowners insurance policies.

Premier carrier

You might be eligible for coverage through a premium carrier if your home is located in California’s high-risk wildfire areas. Here are some top premier carriers, along with their benefits and premium costs for California residents.

How to Prevent Wildfire Damage

California homeowners can take steps to avoid wildfire damage to their homes. This homeowners checklist outlines the top concerns that residents should address during wildfire season.

  • Know your risk: If droughts are threatening your area, you might consider having someone inspect your home and learn about the wildfire response strategies in your area.
  • Get rid of excess vegetation. California wildfires can be started by leafy greens. FEMA suggests homeowners set up a 30-foot safety zone around the house to reduce vegetation volume. Move any vines off walls and shrubs, trim branches/shrubs to within 15 feet from stove pipes and chimneys, and remove tree limbs less than 15 feet from ground. Replace highly flammable plants that are slower growing and more fire-prone with low-growing, lower-fire-prone varieties.
  • Combustibles must be kept away. Keep firewood at least 100 feet from your home. Also, make sure your propane and grill gas tanks are at least 15 feet away from your home. You should also ensure that your grilling equipment is at least 15 feet from the home. Make sure that all gutters are free of leaves and other flammable materials.
  • Don’t leave any exposed space. Decks, porches, and balconies that have exposed spaces beneath them are a source of fuel for California wildfires. Make sure to keep combustibles out of porches and decks. Also, make sure that you have a mesh screen at least 1/2 inch from any overhangs. When building new structures for your home, use fire-resistant patio furniture and other materials.
  • Cover all openings in the home. Attic vents (soffit vents) and louvers are areas where floating embers can easily enter the home and ignite. To keep the home’s burning materials out, cover all openings with 1/4-inch mesh wire.
  • Fire-resistant roofing and siding are available: Replace any wood, shake or shingle roofing material with single-ply membranes or fiberglass shingles. Make sure your siding is made from non-flammable materials like stucco, metal brick, cementshingles, concrete, and rock. You can treat wood siding with UL-approved fire retardant chemicals, but this is not a permanent solution.
  • Take care of your windows. If you have large windows in your home, it can increase the risk of your home igniting combustible material. You can reduce the chance of a wildfire affecting your home and personal property by using fire-resistant shutters and dual- or triple-pane thermal glasses.

You can lower your chances of sustaining damage to your home and submit a claim to your insurer by taking the time to prepare it before wildfire season.

Questions frequently asked

Which is the best homeowner insurance company?

California residents can choose the best homeowners insurer based on their location, coverage options, claims history, and available discounts. If you live in high-risk areas, shop around for the best rates.

If my home is located in an area prone to wildfires, can I be dropped from my homeowners policy?

Each client is a risk that the insurer must evaluate. Your insurance provider could drop you or refuse to renew your policy if your home falls in an area at high risk for wildfires. Talk to your provider to find out if your home is considered high-risk.

Are there any discounts on homeowners insurance for using fire safety equipment?

Many insurance companies offer policyholders incentives for installing fire safety equipment in their homes. Ask your agent if you are eligible for special discounts on your premium due to the presence of smoke detectors, fire alarms, and fire extinguishers in your home.