In the event of a covered fire, your home insurance should take care of the structure of your home, your belongings, relocation costs if necessary and other issues associated with the fire.

Wildfires have been a significant problem over the past few years across the country. Homeowners insurance companies tend to have higher premiums in high-risk areas.

This article includes:

States with the highest wildfire risk in 2021

Wildfires are becoming increasingly dangerous for both people and property. In 2020 alone, 57,000 wildfires burned through 10.3 million acres, killed 37 people and caused over $19.8 billion in damages.

Our team of analysts looked into Federal Emergency Management Agency (FEMA) declarations, property risk evaluations and drought data to find which states are facing the highest wildfire risk in 2021. We found that over 11.2 million properties are at risk and that drought levels are almost 50% higher than they were in 2020.

States with the most wildfire risk and damage
State % of state properties at extreme wildfire risk % of state experiencing severe drought in 2021 FEMA wildfire disaster declarations since 2000
1. Montana 28.50% 18.70% 126
2. Idaho 26.20% 5.50% 34
3. Colorado 16.90% 61.70% 138
4. California 15.00% 77.00% 321
5. New Mexico 14.60% 99.40% 53
6. Wyoming 14.10% 46.50% 20
7. Utah 13.90% 98.10% 32
8. Oklahoma 9.20% 8.50% 190
9. Oregon 9.00% 42.60% 81
10. Arizona 8.50% 94.60% 62
11. Texas 7.20% 39.60% 839
12. Nevada 5.70% 91.70% 59
13. Washington 5.60% 5.80% 140
Methodology: Property risk data compiled from Verisk. Wildfire incidents are counted as FEMA disaster declarations from 1980 to 2019. Drought data was compiled from the United States Drought Monitor database which compared the percent area of the United States that are in “severe drought” (D2-D4) on April 14, 2020, and April 13, 2021.

High levels of drought are especially concerning given the growing number of wildfire disaster declarations. We found there were 363 FEMA Wildfire Disaster declarations from 1980-1999 and 2,016 from 2000 - 2019. This uptick is especially noticeable in Texas and California where many of the country’s wildfires take place.

How does home insurance cover fire?

Home insurance covers your home from sudden and accidental fire. This also includes damage due to smoke. In the case of a covered fire damage claim, most standard homeowners insurance coverage includes:

Dwelling coverage

Dwelling coverage, also known as hazard insurance, protects the structure of your house, as well as built-in appliances like faucets and your water heater. You want the amount of dwelling coverage provided by your homeowners insurance to be equal to the rebuild cost of your home in the event of perils such as forest fires.

Personal property coverage

The personal property coverage section of standard homeowners insurance covers your belongings, including items outside the home and usually items you have kept in a storage facility. This includes items such as furniture, clothing, appliances and yard tools.

Most standard homeowners insurance policies have a personal property payout limit of 50% of your dwelling coverage. Some high-value items such as jewelry, antiques and unique collectibles usually have a lower payout limit than other items. This could put you in a dangerous financial position in the event of a wildfire. In order to make sure your expensive belongings are fully covered in the event of a wildfire, looking into protecting them with a rider.

Detached structure coverage

In the event of a wildfire, your home insurance should cover structures detached from the home, such as garages, gazebos and fences. The coverage payout limit on detached structures is usually 10% of your dwelling coverage. If you should need more detached structure coverage than what your home insurance policy provides, many home insurance companies offer additional detached structure coverage for purchase.

Loss of use coverage

It's not unlikely that a wildfire can cause you to relocate while your home is repaired. Loss of use coverage, also called additional living expense coverage, helps to take care of relocation costs outside of your standard costs of living. This includes temporary housing costs, food and rental storage.

Loss of use coverage usually has a dollar limit of 20% of your dwelling coverage. There may be a limit on the time you have access to LOU coverage from a single claim. Talk with your home insurer to see what your LOU limits are.

Debris removal

After a wildfire, the damaged or destroyed remains of your home will have to be removed before the rebuilding can begin. Some home insurers offer debris removal coverage as part of their standard home insurance. This coverage is usually between 5% and 10% of your dwelling coverage.

Do I need insurance coverage for wildfires?

As part of your home insurance, fire coverage isn't required by state law, but your mortgage company or other lender will probably require it for the duration of your loan.

Even if you don't have a mortgage, having home insurance is a good idea in order to protect one of your most valuable investments. The need becomes greater if you live in a state that has a high risk for fire.

According to the National Interagency Fire Center, there were 58,083 wildfires in 2018 that burned 8.8 million acres of land. By comparison, 2019 had 50,477 wildfires that destroyed 4.7 million acres. While the figures were lower in 2019, that means little if your home is part of that statistic. This is one of the factors that leads to California having an average home insurance rate of $1,684, well above the national home insurance average rate of $1,215.

If getting homeowners fire insurance coverage is difficult

Your community probably has an ISO fire rating. The ISO rating is based on factors indicating how well prepared your area is for dealing with fires. If you live in an area with low capability for dealing with wildfires, you will at least see higher home insurance rates. In some high-risk areas, you may not be able to get homeowners insurance at all.

If you find yourself in either position, you may be able to get wildfire insurance coverage from your state's Fair Access to Insurance Requirements (FAIR) Plan. It's set in place to make sure you can get fire coverage for your home at a reasonable cost.

It should be noted that the FAIR Plan is not a substitute for standard home insurance coverage, as it only covers hazard insurance. You would want to get liability, personal property and loss of use coverage from another home insurance policy.

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