The changing climate and weather patterns have increased the risk of wildfire in many areas. This has left many people word about the relationship between wildfire and home insurance. Below are some of the things you should note about the relationship.
Standard home insurance usually extends to wildfire-related damages. The coverage includes damage caused by the actual fire, damage caused by smoke, and damage caused by related debris. Your insurance company may also compensate you for additional living expenses if your house is uninhabitable due to wildfire damage.
However, wildfire coverage is not universal. Wildfires caused extreme damages and huge losses, so insurance companies are often reluctant to extend coverage to homeowners in areas with high risks of wildfires. In such areas, you might have to pay elevated premiums or purchase separate/additional coverage for wildfire risks.
All forms of insurance coverage have limits; insurance companies cannot pay limitless compensation since that would drive them out of business within no time. Your policy and coverage determine the wildfire damage limits.
Wildfire damage usually causes expensive losses so limits based on actual cash value might not be enough to rebuild your house in case of total damage. You probably need a limit based on guaranteed replacement cost to ensure you won't be out on the cold in case a wildfire damages your home. Fortunately, you can always raise your limits if you need more protection.
Like other forms of coverage, your wildfire insurance premiums will depend on the perceived risks of wildfire damage in your area. This means you can lower your premiums by deploy wildfire mitigation measures. Below are some of these measures:
- Ensure your house is built with materials that can withstand fire damage.
- Clear the area between your home and the nearest vegetation to reduce the risk of fire spreading to your house.
- Don't place flammable materials, such as stacks of firewood, next to the house.
- If there is no fire hydrant nearby, install an external water pump that firefighters can use in case of a fire outbreak.
Note that your home insurance company might cancel your coverage if you have an unusually high risk of wildfire. Therefore, the mitigation factors above will also help you keep your coverage.
Talk to your home insurance agent if you are shopping for home insurance, and you are not sure of the wildfire implications. The agent can also help you with further mitigation measures to reduce the risk of wildfire and lower your premiums.