Homeowners Insurance in Wildfire-Prone Areas

What To Know About Home Insurance in Wildfire-Prone Areas

California has experienced extreme drought conditions, according to the U.S. Drought Monitor, which is a combination of the National Drought Mitigation Center, U.S. Department of Agriculture and National Oceanic and Atmospheric Administration.

“The hot and dry conditions will accelerate the potential for wildfires as vegetation further dries out after the state [California] received less than half of average rainfall and snowpack since October, marking the second driest two-year period on record in Northern California,” said Karen Collins, a spokesperson for the American Property Casualty Insurance Association (APCIA), in a statement.

In the United States more than 4,500,000 homes have been labeled as being a high risk for wildfires. Currently wildfires are destroying more than 2,500 homes in the U.S. per year. Please keep in mind that droughts are not the only concern. The number one cause of wildfires is actually people. A lot of the wildfires have been caused by campfires, cigarettes, improperly used equipment, and arson.

Will My Homeowners Insurance Cover Wildfire Damage?

Most homeowners insurance policies will cover you for fire and smoke, which would include wildfires. Home insurance will help to repair or replace your home if you are the victim of a wildfire. Homeowners insurance can also help to repair and replace lost personal belongings and even pay for additional living expenses if you are unable to live in your home.

Homeowners Insurance Coverage

Different sections of your homeowners insurance policy will cover you in different ways. Below we breakdown the common ways your home insurance policy will protect you.

Dwelling Coverage

This portion of your homeowners insurance coverage will help to pay to rebuild or replace your home if there is damage to the structure of the home or attached structures, such as a garage. You will have coverage up to the policy limits. Your homeowners insurance policy limits are something you set after you determine the cost or value of your home. The cost to rebuild your home will be determined by the materials used to build it, and the labor costs in your area.

Other Structures Coverage

Typically if a structure is not attached to your home it will fall under other structures coverage. Items such as a detached garage, gazebo, fence or shed should be covered under “other structures”. Other structures coverage is usually based on a percentage of your homeowners insurance policy dwelling coverage. Please keep in mind, if you do upgrades to your property such as adding a pool, it would be a good idea to review your policy.

Think about speaking to one of our agents to see if you need to purchase additional coverage.

Personal Property Coverage

Items such as furniture, electronics, appliances, clothing and more will be considered personal property and are covered under this portion of your homeowners insurance policy. Usually policy limits for personal property coverage are set between 50% to 70% of your dwelling coverage. Although, it’s always a good idea to take an inventory of all of your belongings in the home. You will want to list everything you own and how much it costs. If you believe you need more personal property coverage you can always ask one of our agents to increase your coverage.

Additional Living Expenses (ALE) Coverage

If your home is being repaired due to damage from a covered peril such as a wildfire additional living expenses (ALE) coverage will help to reimburse you for the funds you spend. ALE will help you to recover finances from hotel stays, eating at restaurants, and even missed rental income. You may have heard ALE referred to as loss of use coverage.

Homeowners Insurance for Trees, Shrubs, Plants and Lawns

Most standard home insurance policies will cover trees, plants, and lawns up to a particular amount of your dwelling coverage. If you were to have 20% coverage for your trees and shrubs and $500,000 in dwelling coverage, you’d need to have up to $100,000 to replace these items. You will want to take a look at your home insurance policy limits. Some homeowners insurance companies only insure you up to a certain amount per plant or tree.

How is my Home Insurance Affected if I Live in an Area with Wildfires?

Many homeowners have found it very difficult to get insured when living in a high risk area for wildfires. They have even had trouble renewing policies and at the more extreme side have been canceled. Some home insurance companies have even charged higher premiums, increased home insurance deductibles, or declined to write a policy.

It usually a good idea to shop around with an independent broker like Eugene C Yates Insurance Agency if you’re experiencing higher homeowners insurance premiums or are having difficulty finding coverage. Every homeowners insurance company will have different home insurance premiums and charge different rates for coverage.

The California FAIR Plan Insurance

If you’re unable to get homeowners insurance from a standard home insurance company you still have options. The California FAIR Plan is available for homeowners that have been denied coverage from traditional home insurance providers.

The California FAIR Plan is a great option if you can’t find coverage anywhere else. It should be used as a last resort due to the high premiums and limited coverage. In addition, you may need to purchase additional insurance to get similar coverage to a standard policy.

If you would like a custom homeowners insurance quote or have additional questions, please feel free to contact us at 916 313 6100