Insurance Homeowner and Renters Insurance What You Need to Know About Wildfires and Insurance Coverage By Mila Araujo Mila Araujo Facebook Twitter Mila Araujo is a certified personal lines insurance broker with more than 20 years of experience in the insurance industry. She currently serves as the director of personal insurance for Ogilvy Insurance where she works with some of the world's largest insurers and manages the needs of thousands of clients with the help of her broker team. As an insurance expert, has written about homeowners, auto, health, and life insurance for The Balance. Mila received the Bernard J. Finestone Award in General Insurance from McGill University in 2001. learn about our editorial policies Updated on May 18, 2022 Reviewed by Samantha Silberstein Reviewed by Samantha Silberstein Twitter Samantha Silberstein is a Certified Financial Planner, FINRA Series 7 and 63 licensed holder, State of California Life, Accident, and Health Insurance Licensed Agent, and CFA. She spends her days working with hundreds of employees from non-profit and higher education organizations on their personal financial plans. learn about our financial review board In This Article View All In This Article What Is Wildfire Insurance? What's Covered by Your Insurance? How Much Will Be Paid In a Claim? Where Can You to Get Wildfire Insurance? Wildfires and insurance: What damage is caused by wildfire and how is this covered by your insurance?. Photo: Mitch Diamond / Photodisc / GettyImages Wildfires most often happen during certain months of the year known as fire season. This season used to span only a few months. But due to environmental changes over time, the fire season now stretches from late spring through the end of the year. This means it lasts six to eight months. Wildfires have become so common that many say there is no "fire season" anymore. The risk is present all year. There already have been more than 38,000 wildfires in 2020. This exceeds last year's number in the same time period. The ability for a wildfire to spread has a lot to do with the environment. But 85% of wildfires are caused by humans. The rest are natural, caused by lightning or lava. Wildfire embers blown by wind cause many of the fires that burn down homes. As a homeowner, how can you take steps to protect yourself from the financial impact that wildfire can have? The answer is by getting wildfire insurance. Here's a breakdown of what wildfire insurance covers, how it works, and where to get coverage. Key Takeaways As a homeowner, you can get wildfire insurance to protect yourself from the financial impact of wildfires.Standard residential insurance policies will cover damage from fire and smoke. Wildfire damage is thus often included in homeowners insurance.If you are in an area that is at high risk for wildfire, some companies may not be willing to insure you. In cases like this, you can look at a FAIR Plan or other options. What Is Wildfire Insurance? A standard home insurance policy will cover fire damage. But if you live in an area where you are at high risk for wildfires, you may need to buy extra coverage. Many types of insurance provide coverage for wildfires; there is no one policy to protect you overall. For instance, home insurance will cover wildfire damage to your home, land, and personal belongings. Auto insurance will provide coverage for your car. Getting a good policy is essential; it will help you get paid the most in a claim. Wildfire insurance coverage will vary based on the type of damage you have. It also depends on the kind of policy and whether you live in a high-risk zone. Warning There are 4.5 million properties are at high to extreme risk of damage in just 10 states. Not all insurers will cover wildfire damage in a high-risk area. You may have to get a FAIR Plan policy. What Kind of Wildfire Damage Is Covered? Standard residential insurance policies will cover damage from fire and smoke. Wildfire damage is thus often included in these policies. That means you'll be covered for: Damage to the building or main dwelling structure Additional structure coverage Landscaping, pools, and backyard items Additional living expenses Debris removal Building-code upgrade coverage (This is included in some policies, but needs to be added as an endorsement in others.) Personal property or contents For condo owners or renters, residential insurance provides coverage for your personal contents. It also covers additional living expenses. One important factor in knowing how much you will be paid for a wildfire claim is understanding the basis of claims settlement in your policy. Note Your comprehensive car insurance coverage will cover damage by wildfire. If you only have minimum car insurance, or have liability only, then your car will not be covered against fire. How Much Is Paid out for a Wildfire Claim? Every insurance policy is different. This means the limits in your policy will be the factors that decide how much you might be paid for a claim resulting from a wildfire. How can you ensure you get paid the most when you make a claim? Choose a good insurance company that provides the highest limits. Wildfire Claims Settlement Options There are two categories of coverage: Actual Cash Value (ACV) and Replacement Cost. An insurance company can pay a claim based on the following options: Actual cash value or replacement cost: The ACV policy will only pay depreciated value. This will not be enough to rebuild your home. Replacement Cost will give you enough to rebuild your home (up to the policy limit). ACV and Replacement Cost can apply to the building alone, or to the building and personal property. Replacement Cost is optional with many insurers, so you need to ask what your coverage is when you buy your policy. Or see if you qualify for an upgrade. For instance, some homes with older roofs do not qualify for certain types of coverage. Each insurance company has different criteria. Shopping around for the company that will give you the best coverage will make thousands of dollars in the difference in what you get paid in a claim. Guaranteed or extended replacement cost: This coverage will pay up to a certain amount beyond the insured value. That's if the cost of rebuilding is higher than the amount insured on your policy. To qualify for this kind of coverage, you have to insure your building to value. If your home is underinsured, and you have a claim due to a wildfire, you will not be paid what you need. And you may not qualify for replacement cost settlements. Tip Sometimes you can purchase an endorsement on your policy to get the extra coverage you need. Other Coverages That Affect How Much You Get Paid Your choice of the insurance company and the level of coverage you choose will also dictate how much you will get paid for the following: Additional Living Expense (ALE) Coverage: This covers you if your home is made uninhabitable by a covered risk, such as wildfire. You may be able to get compensation for your ALE while your home is rebuilt or made habitable again. Most policies have limits to how much they will pay. You can increase the standard limits by asking to add more coverage. Some policies for high-value homes offer unlimited ALE coverage. Each company is different. Limits: Insurance policies can contain clauses that limit the amount you will get for certain types of personal property. Be sure to ask your insurance company if the limits apply in a fire claim. Then, ask about any extra coverage available to you. Where Can You to Get Wildfire Insurance? You can often wildfire insurance from your home insurance company. Note If you have a mortgage on your home, you often will be required to carry fire insurance along with your homeowner's insurance. You can cancel this once you own your home outright. If you do, though, then you don't have coverage in case of a wildfire and will have to pay out of pocket to repair any wildfire damage. If you are in an area that is at high risk for wildfire, some companies may not be willing to insure you. In cases like this, you can look at a FAIR Plan, or contact your state commissioner's office for guidance. In California, for instance, residents can get wildfire insurance through the California FAIR Plan. Was this page helpful? Thanks for your feedback! Tell us why! Other Submit Sources The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy. NASA. "2019 Fire Season in the Western United States." U.S. Department of Agriculture. "Wildfires in All Seasons?" NIFC. "National Interagency Fire Center Report" National Park Service. "Wildfire Causes and Evaluations." U.S. Department of the Interior. "7 Burning Questions: Wildfires & Public Lands." Insurance Information Institute. "Facts+Statistics: Wildfires." Insurance Information Institute. "Background on Wildfires." Insurance Information Institute. "How Much Homeowners Insurance Do You Need?"