The way home insurance policies address wildfires needs to change, according to a new report.
The report, from USInsuranceAgents.com, examines how home insurance policies address wildfire damage, noting that wildfire-related damages reached $5.5 billion in 2024, up from $1.2 billion in 2015. Most home insurance policies in the US treat wildfire damage similarly to other covered events, such as kitchen fires. Standard coverage typically includes protection against financial losses caused by wildfires, without the need for a separate policy.
However, the increase in fire risk and associated costs has led some insurers to exit certain markets, contributing to higher premiums for homeowners.
Wildfires are generally included under the list of perils covered by standard home insurance policies. In contrast to natural disasters like floods or earthquakes, which require separate coverage, wildfire damage is typically included.
The report outlined several steps homeowners can take to mitigate wildfire risk, which may help them qualify for insurance or receive rate reductions. These steps include creating a defensible space around the property, using fire-resistant building materials and maintaining the home.
If current wildfire trends continue, an increasing number of homeowners may encounter challenges securing insurance, according to the report. While state-backed plans offer limited protection, they remain an option for those unable to access private coverage.
Meanwhile, in high-risk areas, including parts of California, some homeowners have experienced difficulties securing coverage. Recent wildfire events have left homeowners without insurance after their policies were dropped and no alternative options were available.
California residents who are unable to secure traditional home insurance due to wildfire exposure may turn to the California Fair Access to Insurance Requirements (FAIR) Plan. These state-backed policies provide a basic level of insurance coverage that meets lender requirements but often carry higher costs and limited benefits.
“Compare local markets and try to find coverage on the competitive marketplace. FAIR plans will not have as many options and will have more restrictions,” advised Melanie Musson, a home insurance expert with USInsuranceAgents.com.
