How to find affordable homeowners insurance in a high-risk fire zone
May is National Wildfire Awareness Month, and it also marks the beginning of wildfire season, which serves as a reminder that finding adequate home insurance may need to be a priority for homeowners who live in many areas of the United States that are prone to wildfires. Across the country, nearly 4.5 million homes are at risk of wildfire damage, with droughts and other environmental issues increasing the likelihood of fire damage year after year.
According to the National Interagency Fire Center (NIFC), 50,477 fires burned 4,664,364 acres in 2019, and that number is expected to rise to 58,950 fires burning 10,122,336 acres in 2020. Despite a slight decrease in 2021, there were still 58,985 fires affecting 7,100,000 acres that year. Because of the wildfire risk, homeowners insurance can be expensive in these areas, and some carriers may refuse to renew or deny coverage to new customers in high-risk zones. Even if you live in a high-risk area for wildfires, there are ways to find homeowners insurance coverage. All you need to know is where to look and how to shop around with various carriers.
How fire risk affects homeowners insurance costs
Most insurance companies will consider the location of the home as well as the features of the surrounding area when determining home insurance rates. Neighborhoods near wildfire zones are more vulnerable to damage or total loss, requiring insurance companies to pay out large sums to cover losses should this type of natural disaster occur.
The more likely it is that a covered disaster will occur, the higher the rate for a home insurance policy will be. This is especially concerning because the wildfire risk continues to spread to new areas of the country, putting areas that were previously unaffected by wildfires at high risk for this type of natural disaster.
Why it’s hard to find homeowners insurance in fire-prone areas
Because of the increased risk of loss in fire-prone areas, homeowners may find it more difficult to obtain property insurance coverage. Insurance companies may be concerned about how to manage risk and pay for losses in these areas, as insured wildfire losses have exceeded $13 billion in three of the last four years, according to S&P Global. Farmers Insurance, for example, paid out nearly $2.1 billion in wildfire-related losses in 2018.
Because of the large number of losses, many insurance companies are enforcing stricter policies regarding where homeowners insurance is available. In order to manage their own risk and financial solvency, some companies may deny coverage to specific ZIP codes entirely, or may choose to cancel or non-renew policies on homes in high-risk areas.
How to reduce the risk to your home in a fire-prone area
A standard homeowners insurance policy will cover you against wildfires, but taking some of these mitigation steps may reduce your risk even further, especially if you live in a wildfire-prone area. The following are some suggestions for reducing the risk to a home in a fire-prone area:
- Installing a Class A-rated fire-resistant roof: These roofs may help to reduce fire damage to your home. Concrete or clay tiles, fiberglass asphalt shingles, or metal roofs are typical Class A roof covering materials.
- Retrofit your home: CalFire, California's Department of Forestry and Fire Protection, has a list of ways you can retrofit your home to protect it from wildfires. Vents, windows, walls, and even rain gutters and fences could benefit from some attention to help reduce wildfire damage.
- Create a defensible zone around your home: The key to this strategy is to keep any flammable vegetation away from your home. This could include removing plants and shrubs from windows, decks, balconies, and stairs, as well as removing other potential fire hazards near the home's exterior, such as mulch, pine straw, firewood, or debris.
Tips for finding affordable homeowners insurance in a high-risk fire zone
While finding homeowners insurance in a high-risk fire zone may be more difficult, it is not impossible. If you're having trouble finding affordable homeowners insurance in a high-risk fire area, or if you can't find insurance at all, these tips may help:
- Ask your neighbors. It may be beneficial to ask neighbors for the names of the insurance companies that cover their homes. This allows you to compile a list of potential carriers who may be willing to insure your home. Furthermore, you can generally assume that the insurer offers policies in your ZIP code, though you won't know for sure until you request a quote.
- Shop around with more than one carrier. When it comes to finding carriers, it may be beneficial to keep your options open. If you're having trouble finding an insurance company willing to cover your home, or if the quotes you're getting are much higher than you expected, it may be worthwhile to inquire about coverage from both large, nationally available carriers and small regional home insurance companies. The Triple-I recommends obtaining multiple quotes from local insurance agents in order to compare costs and coverages.
- Take advantage of discount opportunities. Some insurers may offer significant discounts for bundling your car and homeowners insurance coverage, or they may offer discounts for a variety of other reasons. If you want to save money on your home insurance policy, ask the insurers or agents you're getting quotes from about discount opportunities.
- Consider a FAIR Plan. While it is often a temporary solution, purchasing homeowners insurance through your state's FAIR Plan could be one way to obtain coverage while you look for a permanent solution. However, FAIR Plan coverage may be less comprehensive than that of a private insurer policy, and it may also be more expensive.
Frequently asked questions
Is there a separate wildfire homeowners insurance policy?
A standard homeowners insurance policy includes wildland fires as one of the covered perils. This means you won't need to purchase additional wildfire insurance for your home because it will already be covered. However, not all insurers will issue home insurance policies to homeowners in high-risk or fire-prone areas, so you may need to take extra precautions if you live in these areas.
How do I find a homeowners insurance policy?
If you need to get a homeowners insurance policy, getting a quote can be beneficial. Many companies allow you to begin or finish the quote process online, but you can also contact a local agent to begin working on a personalized quote for your property. If you live in a wildfire-prone area, a local agent may be the best place to start because they are more familiar with the area and can provide customized solutions to meet your coverage and financial needs.
What happens if my homeowners insurance policy is not renewed?
Homeowners insurance companies are required to send out non-renewal notices prior to the expiration of your policy term, explaining why they are not renewing your coverage. The actual timeframe for providing this notice may vary depending on your state regulations. Furthermore, depending on the reason for the non-renewal, you may be able to resolve any concerns the insurer has in order to keep your coverage. If not, you can shop around for new home insurance coverage during the time between receiving the non-renewal notice and the expiration date of your current policy.