If you live in a wildfire-prone area, it’s essential to understand your homeowner’s insurance coverage for wildfires. Understanding what insurance covers for you can make it easier to navigate a claim when the time comes.

As the insurance market struggles to cope with increasing wildfire risks, some companies have raised premiums, deductibles, and policy limits. Others have yet to write policies in high-risk areas.

Coverage

In a fire, your home insurance policy will help cover the costs to rebuild or repair your house and outbuildings like a garage, shed, and toolshed. It will also pay for smoke damage and debris removal.

Despite this, homeowners in high-risk areas often pay higher premiums than those in less wildfire-prone regions. These prices reflect the increased risk to insurers from wildfires and include other factors such as defensible space.

The cost of home insurance for wildfire-prone areas will likely continue to rise as more people move into these communities, and insurers are struggling to remain competitive. Insurers are also taking more steps to prevent losses due to wildfires.

Some insurers require customers in fire-prone areas to control the growth of trees and undergrowth to renew their policies. Others offer “defensible space” programs and other incentives to encourage people to manage their properties responsibly.

In addition to standard homeowner’s insurance, some landlords and condominium owners may be able to get coverage for their properties through their HOA master policies. Depending on the type of master policy, some condos can receive coverage for the interior walls of the unit and specific items within it.

Deductibles

The cost of insurance to cover wildfire damage is primarily determined by the size and value of your home, the size, and location of your property, prior claims, and the specific coverage options included in your policy. The annual premiums and available deductibles vary widely, so research is essential when choosing a policy.

Homeowners in areas that are at higher risk of wildfires often face much higher deductibles than those who live in less-risky areas. Depending on your policy, these deductibles may be as high as $10,000.

If you’re living in a high-risk area, it’s essential to understand how deductibles work and why they are so high.

These deductibles can significantly affect your ability to file a claim after a fire damages your property. In addition to your deductible, you’ll also need to cover the costs of repairing your home and replacing your personal belongings.

Loss of use coverage can be critical in the aftermath of a wildfire because it pays for costs associated with moving out of your home while it’s being repaired or rebuilt. This includes hotel stays and restaurant bills, but it can also cover the cost of short-term housing while your house is under repair.

Policy Limits

Regarding insurance coverage for wildfires, there are many different options. The most common way is to get a standard homeowners policy from an insurer in your state’s admitted market. If this isn’t possible, you might opt for a policy from an excess or surplus line insurance company.

If you must rebuild your home after a wildfire, ensuring you’re adequately covered is the most important thing. That’s why checking your policy’s coverage limits and ensuring they reflect your square footage, features, and construction quality is essential.

Another consideration is to ensure that your home is built to the current code and has the right amount of fire protection to prevent further damage. Your local insurance agent or home insurer can give you a quick estimate of the costs involved in rebuilding your home after a fire.

The key is to choose a policy that gives you enough money to rebuild your home at current new-build prices. This will allow you to move on with your life after a fire.

You can also add “loss of use” (LOU) coverage to your policy to help cover the cost of staying at a hotel or other temporary lodging place while waiting for your house to be repaired. LOU coverage is typically a percentage of your dwelling coverage; you can increase it as needed.

Additional Living Expenses

If your home is damaged or destroyed by a covered peril, such as a wildfire, your insurance policy should help cover your expenses while temporarily living elsewhere. Additional living expenses (ALE) coverage is often a standard part of homeowners, condo owners, and renters insurance policies.

ALE can cover your hotel costs, food, and other expenses until your home is livable. The amount of ALE you can use vary depending on your policy, but it typically amounts to about 10% to 20% of the dwelling portion of your insurance.

However, if you don’t have enough ALE to meet your needs after a loss, you may want to add extended or guaranteed replacement cost to insurance coverage for wildfires. Using your ALE to pay for hotel stays is an excellent way to stay safe and healthy while waiting for repairs or construction process to complete. But be sure to compare your expenses to your regular lifestyle before claiming so you don’t end up with too much coverage or too little.