What you need to know about wildfire insurance in California (USA)

Owning a home in California is a dream come true for many people, especially if you love the beach and endless sun. But if you own a home in the Golden State, it’s important to understand the serious risk of wildfires. In 2021, there were 8,619 wildfires in California burning nearly 2.6 million acres. No matter where you live in California, having to protect your home can be imperative.

What causes California wildfires?

According to the National Park Service, about 85% of wildfires in the US are caused by humans. The most common causes of wildfires include the following:

  • Burning debris
  • Carelessly discarded cigarettes
  • Equipment malfunctions
  • Intentional arson
  • Unattended campfires

In addition to human causes, lightning has the potential to start wildfires if it lasts for an unusual length of time. Especially during the 2020 California wildfires, dry lightning was a major cause of record burns. The state’s hot, dry weather only added fuel to the 14,000 dry lightning strikes that sparked flame after flame in 2020.

Some areas of California have a higher risk of wildfires than others, which can make it more difficult to find affordable home . For example, if you live in Los Angeles County, Riverside County, Napa County, or Yolo County, you can expect to pay a much higher rate for home insurance on average, as these areas are more prone to to forest fires.

When you apply for a home insurance policy, insurers charge for coverage based on the level of risk they assume by hiring you as a policy holder. Because of this, some insurance companies will charge higher premiums, increase deductibles, limit payments, or deny coverage altogether for homes in high-risk regions.

Does home insurance cover wildfires?

Most standard homeowners insurance policies will cover fire damage, including from wildfires. There are many different coverage types that can help policyholders afford the cost of repairing or replacing their homes, or replacing personal property.

Dwelling coverage

Dwelling coverage pays for the cost of rebuilding or replacing the physical structure of your home and any other structures attached to it after a wildfire event, including decking or attached garages. Because rebuilding your home after a wildfire can be very expensive, it’s important that you have enough dwelling insurance. The cost of rebuilding a house in California depends on the area. For example, the average build cost in Fresno — a city that is susceptible to wildfires — is $290,000.

Other structures coverage

Just like dwelling coverage, other structures coverage provides financial support for the cost to rebuild or replace unattached structures on your property affected by wildfires, including sheds, detached garages, fencing and pool houses. If you have multiple detached structures on your property, make sure to purchase enough coverage to rebuild them in the event of a wildfire. Your dwelling policy usually does not extend coverage to detached structures.

Personal property coverage

Personal property coverage pays to repair or replace your personal items that get damaged in a wildfire. It applies to most things you own, including appliances, clothing, furniture and electronics. When choosing personal property coverage limits, it’s a good idea to survey your personal items to make sure you have sufficient coverage limits. Even if a wildfire does not burn everything inside your home, most items need to be replaced due to smoke damage.

Loss-of-use coverage

This coverage is also referred to as additional living expenses and covers the cost of hotel stays, meals and other expenses related to being unable to live in your home due to a wildfire. If you live in California, having loss of use coverage can be critical. If a wildfire destroys your home, you would need to live somewhere else while your house is being rebuilt. Loss of use policy limits are usually tied to the amount of dwelling insurance you have, but the policy limits can usually be raised.

Does condo insurance cover wildfires?

In most cases, condo insurance policies will cover wildfire damage caused to the interior walls of your living space. The exterior of the condo should be covered by your homeowners association’s master policy. Each condo insurance policy has different coverage options available that can help policyholders afford the cost to replace, repair, or rebuild personal property damaged in a wildfire event.

Interior walls coverage

Depending on the type of master policy your HOA has in place, coverage may be provided for specific items inside your condo if they get damaged in a wildfire. An “all-in” master policy provides coverage for things like appliances, carpets, electrical and plumbing while a “bare walls” policy, nothing inside the unit’s walls will be covered. With interior walls coverage, you will likely be able to use your policy to pay for the cost to repair or replace damaged items within the walls of your condo that would not be covered through the HOA master policy.

Personal property coverage

Just like with a homeowners insurance policy, personal property coverage allows condo owners to recover the cost for replacing personal items like electronics, furniture, appliances and jewelry if they get damaged in a wildfire. Your HOA’s master policy will not cover your personal property, even if it is an all-in policy or the wildfire destroys the entire building.

Additional living expenses coverage

As with homeowners insurance, this option covers any expenses incurred as a result of being displaced from your condo due to a wildfire event. Expenses like hotel stays, restaurant bills, pet boarding and laundry services can all be covered by your insurance provider if you have elected additional living expenses coverage. Californians who have been asked to evacuate can submit a claim, even if the wildfire never reaches their condo.

How do you get insurance in common wildfire areas?

As mentioned, some insurers may deny coverage or discontinue coverage for homeowners living in high-risk areas for wildfires. This is especially common in certain areas of California, such as Los Angeles, San Diego, and Sacramento. If this happens, there are a few routes that homeowners can take to obtain coverage.

The FAIR Plan

The Fair Access to Insurance Requirements (FAIR) Plan is a state-mandated program that offers access to insurance products for individuals living in high-risk properties, such as those in wildfire-prone areas of California. State residents can apply for the plan if they own property in California and meet certain building requirements.

While the FAIR Plan provides coverage solutions for high-risk homes, residents can only qualify if they’ve thoroughly exhausted the options available through the voluntary market and been denied coverage. Not only are FAIR Plans more expensive, but they offer fewer coverage options and lower policy limits. For instance, the California FAIR Plan does not currently offer personal property or replacement cost dwelling coverages. Additionally, the plan will not cover:

  • Houses with existing damage that have no repair plans
  • Long-term vacant or unoccupied homes
  • Properties used for federally illicit means

Surplus or excess line carrier

In addition to the California FAIR Plan, residents may be able to obtain homeowners insurance through a surplus or excess line carrier, like PURE Insurance or Markel. These insurers provide coverage for homes that carriers through the standard marketplace won’t take on as clients. Surplus lines do not abide by the same state regulations that standard carriers do, making them more expensive than the average homeowners insurance policy.

Premier carrier

If your home is situated in a high-risk wildfire area in California and you’ve been dropped by your standard provider, you might be able to find coverage through a more expensive premier carrier. The following outlines a couple of the more popular premier carriers and their average annual premiums, gathered from Quadrant Information Services, as well as their benefits and eligibility requirements for California residents:

Insurance companyAverage annual premium cost for $250,000 dwelling coverageCoveragesEligibility requirements
Chubb$1,801Additional living expensesPersonal liabilityPersonal property replacement cost coverageExtended replacement cost coverageHome value must be more than $250kMust be a California resident
PURE$3,400Dwelling coveragePersonal property coverageLiability coverageMedical Payments coverageLoss-of-use coverageReplace, rebuild, or cash settlementGuaranteed replacement cost coverageLoss prevention benefitOnly for high-net-worth individualsMust be a California resident

How to help prevent wildfire damage

California homeowners can take some steps to prevent wildfire damage in their homes. The following homeowners checklist illustrates the points of top concern that residents should address during the wildfire season:

  1. Know your risk: Be aware of droughts affecting your area, consider having a professional inspect your property and understand your community’s wildfire response strategy.
  2. Remove excess vegetation: Leafy greens are fuel for wildfires in California. FEMA recommends that homeowners create a 30-foot safety zone around their residence to keep the volume of vegetation to a minimum. Remove any vines from walls, move shrubs away from the structure, prune branches/shrubs within 15 feet of chimneys and stove pipes, remove tree limbs within 15 feet of the ground and replace highly flammable plants with lower growing, less fire-prone species.
  3. Keep combustibles away: Keep all firewood stacked at least 100 feet and uphill from your home. Additionally, ensure your grill gas and propane tank are at least 15 feet from the home. Be sure a 15-foot clearing exists around your grilling equipment as well. Be sure all gutters are clear of leaves and other flammable debris.
  4. Do not leave exposed space: Decks, porches and balconies with exposed space beneath are fuel for California wildfires. Keep combustibles cleared from underneath decks and porches, and extend a ½-inch mesh screen from all overhangs to the ground. Use fire-retardant patio furniture and materials when building any new structures to your home.
  5. Cover openings to the home: Attic vents, soffit vents and louvers are prime areas of the home where floating embers and burning debris can easily enter and ignite. Be sure all openings are covered with ÂĽ-inch mesh wire to keep burning materials outside the home.
  6. Have fire-resistant roofing and siding: Replace any wood, shake, or shingle roofing materials with fire-resistant alternatives such as single-ply membranes, fiberglass shingles, slate, metal, clay, or concrete tile. Ensure your home’s siding is created from non-flammable materials such as stucco, metal, brick, cement shingles, concrete, or rock. Wood siding may be treated with UL-approved fire retardant chemicals; however, this is not a permanent solution.
  7. Treat your windows: If your home has particularly large windows, this can increase your risk of igniting combustible materials within your home. Dual- and triple-pane thermal glass and fire-resistant shutters may help reduce the risk of a wildfire event affecting your home or personal property.

By taking the time to prepare your home’s interior and exterior features before the wildfire season, you can reduce your risk for incurring damage and submitting a claim to your insurance provider.