Does My Homeowners Insurance Cover Wildfire Damage?

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In recent years, wildfires have dominated the news. We’ve watched on TV while people evacuated their homes, taking with them just what fit in their cars. In the aftermath, we’ve read in newspapers about huge insurance payouts and how communities have started to recover.

Maybe you’ve wondered if it happened to you, could you rebuild? Would your home fire insurance pay enough money, and where would you live in the meantime? If you’re concerned, read on to find out the ins and outs of home fire insurance.

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Do you live in a state with wildfires?

Top states affected by wildfires

Here are the top states affected by wildfires, and the seasons they happen.

State
Season
California Mid-summer to early fall
Texas Early spring to late spring
Nevada Mid-summer to early fall
Washington Early spring to mid-fall
Kansas Mid-spring to early fall

California ranks at the top of the list, with 1.3 million acres burned and $96.4 billion in fire damage in 2017. In Nevada, 1.3 million acres burned, and in Texas, over 700,000 acres went up in flames. Kansas and Washington round out the bottom of the list, with around 400,000 acres burning in both states.

Fire damage in California was much worse than the other states due to the fire’s proximity to developed areas.

While some states have more wildfire risk, any state can experience fires and the damage that comes from them. To protect yourself from the financial problems of fire damage, you should know what coverage you have.

Wildfires and homeowners insurance: what’s covered?

Home fire insurance isn’t a specific policy you buy like it is with flood insurance. Most homeowners insurance policies include fire damage coverage. Homeowners insurance typically covers the following in a fire:

  • Damage to your home and belongings
  • Damage to outbuildings such as garages and sheds
  • Living expenses if your home is uninhabitable
  • Landscaping

If you live in a high-risk area, consider purchasing extra fire insurance coverage. Advocacy group United Policyholders estimated that two-thirds of residents in California don’t have enough coverage for wildfires. Talk to your provider to find out how much coverage you have.

How much will be covered? Is there a limit?

Homeowners policies pay to repay or build your house if it’s damaged in a fire. They’ll pay out up to the coverage limit you choose when selecting your policy. When shopping for home insurance, pick a limit high enough to cover the full replacement cost of your home.

To help you know if you have enough coverage, check your policy for the detached structures, personal belongings coverage, your deductible, living expenses and cash value vs. replacement value.

Detached structures

Homeowners insurance will also cover detached structures on your property, like a garage or a shed, but that coverage could be limited to 10% of the insurance you have on your primary dwelling.

Personal belongings

Personal belongings include clothing, furniture and other personal items that are damaged in a wildfire or another covered peril. Insurance generally limits payouts on these items to 50 to 70 percent of the total dwelling coverage. For expensive items such as jewelry or collectibles, you might want to buy a rider that provides additional protection.

It’s a good idea to inventory your belongings and take pictures of particularly valuable items in case you need to file a claim. Keep those records someplace safe, away from your main dwelling or accessible online. Proving that you owned the things you’re claiming will speed up the claims process.

Deductible

Deductibles represent the out-of-pocket costs you pay before insurance coverage kicks in. Choosing a higher deductible lowers your monthly premiums, but don’t pick a deductible that you couldn’t comfortably pay.

Cash value vs. replacement value

Your home is probably full of items you bought several years ago, from a television to the living room sectional. Many, if not all, of these items would now cost much more to replace. Some insurance policies will only pay out the cash value of the destroyed or damaged item. That may not be enough to buy a replacement.

Consider choosing a policy with replacement value coverage. While the premiums will be higher, the policy would payout enough to buy a new television at current market prices. If you live in an area prone to wildfires, paying for the extra coverage helps you truly rebuild your life.

Living expenses and wildfire coverage

If you can’t live in your home while it’s being repaired, additional living expenses coverage pays for an apartment or hotel room and meals. This coverage can be particularly helpful in case of a wildfire. Your policy will define the reimbursement amount and likely set a time limit on how
long you can receive benefits.

Can insurance companies deny me coverage after a wildfire?

Wildfires used to occur rarely, so insurers didn’t exempt them from coverage. But with cities expanding and more homes built in high-risk areas, wildfires that affect homes have become more common. There have been rumblings that insurers would start to lump them in with floods, hurricanes and other natural disasters, which most standard homeowners insurance policies exclude.

For now, you may pay higher premiums, but you should still be able to find a carrier willing to cover your home. If you’re denied coverage in California, you can purchase fire-related coverage through the Fair Access to Insurance Plan.

If you have any questions about your homeowners insurance policy and wildfires, talk to your agent. They can review your risk and coverage levels. Ultimately, you’ll sleep easier at night knowing that you could recover from a wildfire.

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