Wildfire
Insurance: According to Corelogic report from 2019,
775,654 residential homes were at risk for wildfire damage across 13 western
states. According to Corelogics 2019 report, there were 775,654 homes in 13
Western states that were susceptible to wildfire damage. By 2020, this number
would increase upto 4.5 million.
Wildfire Insurance: What is it?
Wildfires are usually covered by standard
policies of home insurance from insurers approved by state. Things are still
changing. Insurers in high risk areas have increased premiums since 2017 due to
rise in wildfire damages across West. Its crucial to check policy to see what
perils are covered.
The insurance coverage can vary, but should
typically cover:
- The structure or building of your home
- Additional structures such as garages, sheds & apartments
on your property
- Landscape, pool area, patio & content
- Debris Removal
- The contents of house or personal property
- The upgrade to building code may be optional or standard
- Living expenses
How Much Will Your Insurance Company Pay If There Is
Wildfire?
Youll want to make sure you understand your
policy & its limits. If you reside in fire prone region, make sure that you
are adequately insured. This will ensure you receive money you need to replace
your house with similar features & at todays new build prices.
Guaranteed/Extended replacement cost
Replacement cost value is type of insurance
that will allow you to build at new construction prices. It covers your actual
costs to rebuild, up to certain limits.
ONeill advises asking general contractor or
realtor what cost per square foot of construction is currently in your region
& multiplying it by square footage of your house to ensure youre covered.
Some states offer policies with
guaranteed/extended cost replacement, where your house is replaced regardless
of how much building materials or labor cost after disaster spikes as people
try to rebuild everything at once. This coverage costs more, but it covers you
for entire cost.
In some places, building codes changed
dramatically over last 30 years. People who are shopping for insurance in areas
prone to wildfires should look at policies that provide coverage for updated
building code requirements during reconstruction. You will have money you need
to rebuild your home to meet todays standards.
Another item to consider is loss of use
insurance, also known as additional living expenses coverage. This coverage,
which is usually affordable, covers hotel costs & any other expenses
incurred if you are unable to live in your house during an evacuation.
Peace of mind
Wildfire Response Endorsement &
Wildfire Defense Services may also be helpful in conjunction with your
insurance. It may make sense in wildfire prone areas to pay for this retainer,
which acts as private firefighting department that is ready to act if theres
threat of wildfire to your home. Costs vary by insurance company. However,
some, such as State Farm have recently included this service for all their
policyholders.
Important
State Farm will stop accepting applications
for new home insurance policies in California on May 27, 2020. This includes
all personal & business lines of property & casualty coverage. This
change did not affect existing policies or personal auto policies.
This coverage is available when wildfires
threaten your home. class 6 team of fire engines (with wildland bush trucks)
will be sent to harden house, shut windows & doors & clear any
defensible area. Sprinklers are also installed & flame retardant foam laid.
Where can you get wildfire insurance?
Check with your insurer to find out if they
offer wildfire coverage. You may find that if you live in an area with higher
risk of wildfires, your insurance coverage is not available. FAIR program,
which is government mandated plan to provide fair access to high risk property,
could be solution.
Insurance companies are denying renewals in
many places near areas that lost homes due to catastrophic
wildfires. In many states, insurance commissioners set one year moratorium
for non renewals after wildfires that are considered catastrophic. You can
appeal decision that you were not renewed by your insurer.
Contact your state insurance commission to
request help. ONeill advises consumers to document their efforts (take photos
before & after, save receipts from contractors & materials) to protect
against wildfires. They should also contact their insurance agent & share
documentation.
You can buy home insurance through an
admitted insurer if you are not renewed. However, this will cost between three
& six times as much. If youre not renewed, your options are to buy coverage
from non admitted carrier (not approved by insurance department of your state),
which costs about three to six times as much as home insurance with an admitted
carrier.
ONeill also says that homeowners who live
in areas at high risk should record their home & its contents every year
(rather than just taking photos, since photos can be photoshopped & less
reliable). Open drawers & doors in each room, as well as closets &
storage spaces, to take pictures of your possessions. Noting serial numbers,
makes & models is useful for electronics & high value products. You can
save video copy to cloud storage, such as Google Drive or Dropbox.
What are claims settled in an insurance case for
wildfires?
In order to receive compensation, insured
will need to file form within 15 days after fire. Claimants must submit photos
showing damage. While clearing up debris & cleaning is important, do not
remove evidence until your claim has been processed.
Can an insurer deny claim for wildfire?
If insurance company believes that damage
claim is exaggerated or excessive or policy of home owner was not paid up to
date at time fire occurred, they can refuse claim. Maintain your policy payment
schedule!
What is Wildfire smoke claim?
You can submit claim for smoke if your home
was not destroyed in fire, but it has been damaged by smoke, ash or soot from
wildfires within 10 miles. Wildfire smoke claims can be filed if your home is
damaged by soot or smoke.
The Bottom Line
Your homeowners policy will cover wildfires
in most areas that are not prone to them. best kind of insurance is to never
need to file claim. Therefore, it is important to educate yourself about risks
associated with wildfires, to harden your home & to manage vegetation
around your house to create defensible area.
The FAQ
Is insurance against wildfires mandatory?
Wildfire
insurance in USA is not required. Highly recommended to homeowners who
live in high risk areas for wildfires.
What is cost of wildfire insurance?
Wildfire insurance costs can be affected by
several factors including:
- Location Zones at higher risk of wildfire will be charged higher rates.
- Home value: Your homes value directly affects price of insurance.
- Deductible higher deductible will lower your insurance premium, but
increase amount youll have to pay out of pocket in case there is claim.
- Choose your insurance
company: There are many companies that offer
different rates & options.
Which factors will determine whether I require wildfire
insurance?
- Location: Consult local authorities or insurers to determine wildfire
risks in your area.
- Value of property: Take into account costs involved in rebuilding your house if
you lose it to fire.
- Your financial
situation: Assess your capacity to absorb
losses financially without insurance.
How can I get wildfire policy?
- Actual cash value vs.
replacement cost: Select coverage that covers
full rebuilding expenses & not only depreciation.
- Debris Removal: Make sure your insurance covers costs of clearing debris
following fire.
- Living expenses
beyond basic coverage: Verify your insurance
limits in order to determine if you are covered for additional living
costs.
- Wildfire Mitigation
Measures: Certain insurance companies provide
discounts for taking wildfire mitigation measures, such as installing fire
resistant roofs or clearing brush surrounding your home.
