In 2018, the United States had more than 52,000 wildfires. A single wildfire can cause unimaginable damage. For example, the 2018 Mendocino Complex fire in Northern California encompassed nearly 460,000 acres. From January 2019 through early October 2019, wildfires scorched 4.4 million acres nationwide, according to the Congressional Research Service. Fire insurance can help if you’re at risk.
When wildfires strike, they can destroy everything in their paths. In California and Texas alone, nearly 3 million properties are at risk of wildfires, according to the 2019 Verisk Wildfire Risk Analysis.
Business owners and homeowners need to protect their properties with insurance that covers wildfire damage. But structures are not the only types of property that need insurance that covers wildfire damage.
If a wildfire consumes your home and destroys your car, your homeowners policy will not pay to replace the vehicle. But does your auto policy provide all the protection you need?
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Does auto insurance cover wildfire damage?
Homeowners in wildfire prone areas often have a difficult time finding an insurance company to insure their properties. However, some states have created programs to ensure homeowners can obtain the coverage they need. For instance, the California FAIR Plan helps people purchase home coverage for properties deemed uninsurable by insurance companies. However, you must rely on car insurance for wildfire coverage.
Basic, state-required liability car insurance does not cover any damage to your automobile. However, most comprehensive car insurance policies cover fire damage, including losses caused by wildfires. In today’s market, insurance companies typically include wildfire damage as a covered peril. However, insurance companies can change their policy terms based on risk levels. That’s why it’s important to know what your policy covers. Always carefully review the terms of your coverage each time you renew your car insurance policy.
For your comprehensive insurance to cover wildfire damage, you must purchase the policy before the onset of a fire. For example, if a wildfire breaks out near your home, the insurance company would not likely allow you to add comprehensive coverage to an existing policy. If you were able to obtain the coverage after the outbreak, the insurance company may deny your claim if the fire destroys your car.
If you are still paying for your automobile, the lender will require you to carry collision and comprehensive insurance until you’ve made all payments. Collision coverage pays to repair or replace your car following a collision. For example, if you total your vehicle in a traffic accident, your collision coverage will pay a limited amount to replace it.
Comprehensive coverage pays to repair or replace your car when it is damaged, stolen or totaled due to a non-collision peril. Typically, covered perils include damage caused by “Acts of God”, hail, lightning, theft or vandalism.” Acts of God refers to natural disasters, such as hurricanes, ice storms and wildfires.
Read your policy carefully to make sure your comprehensive coverage includes Acts of God losses and does not specifically exclude wildfire damage. If your policy excludes wildfire damages, speak with your insurance agent about purchasing supplemental coverage or shop the market for a company that covers the peril.
How much does fire insurance cost?
Many factors impact your car insurance rate, including your age, the make and model of your automobile, your driving record and your location. In most states, insurers can also use your credit score as a rating factor. According to the Insurance Information Institute, U.S. car owners pay an average of $134 per year for comprehensive insurance. We requested an auto insurance quote from Geico, using the following composite profile.
- Automobile make and model: 2015 Honda Civic Sedan
- Car owners: married couple, ages 57 and 40
- Location: Santa Rosa, California
- State required minimum levels of liability and uninsured/underinsured motorist coverages
- Comprehensive deductible: $500
We received a quote for a six-month premium of $221, of which comprehensive coverage cost $19.70. Although wildfires have recently posed a threat to Santa Rosa, we still received an affordable comprehensive rate from Geico. For the most accurate cost estimate, ask an insurance agent from your chosen provider to give a quote with your specific information.
How much will be covered? Is there a limit?
States require you to purchase minimum levels of liability coverage to pay for the bodily injuries or property damage you may cause in an automobile accident. Car insurance companies allow you to adjust liability coverage limits. For instance, if your state requires you to carry $25,000 worth of bodily injury liability insurance, you could elect to increase the cover to $30,000.
But comprehensive auto insurance doesn’t work that way. Insurance companies set comprehensive limits based on the depreciated value of your vehicle, not its replacement cost. For example, if a wildfire destroyed your 2015 Honda Civic sedan, your comprehensive insurance policy would only pay an amount equal to the depreciated market value of the used car, minus your deductible.
According to Kelly Blue Book, used 2015 Honda Civic sedans sell for $10,000 to $11,000 on the retail market. But the insurance company may only pay a claim based on the car’s trade-in value, around $8,100.
Collision coverage works the same way. If an engine fire destroys your vehicle, the insurance company will pay the claim based on its actual cash value. In either instance, you likely would need to spend some of your own money to replace your car. If you live in a state that is prone to wildfires, you might want to pay extra for replacement cost coverage.
You might not be able to get your vehicle out of the path of a fire. But if you live somewhere wildfires may be an extra risk or want to be cautious, you can protect yourself by making sure your auto insurance will cover damage if your car gets damaged in a wildfire.