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 2022

Wildfires are becoming increasingly dangerous for both people and property. In 2021 alone, 59,000 wildfires burned through 7.1 million acres and caused nearly $90 billion worth of damages.

Our team of analysts looked into Federal Emergency Management Agency (FEMA) declarations, property risk evaluations and drought data to find which states face the highest wildfire risk in 2022. We found that over 11.2 million properties are at risk and that most wildfire-prone states are facing severe droughts.

States with the highest wildfire risk
Rank State % of state facing extreme wildfire risk properties facing extreme risk % of state experiencing severe drought
1 Montana 29% 137,800 65%
2 New Mexico 15% 131,600 96%
3 Wyoming 14% 36,800 51%
4 Utah 14% 136,000 99%
5 Idaho 26% 175,000 50%
6 Texas 7% 717,800 68%
7 California 15% 2,040,600 95%
8 Oregon 9% 147,500 66%
9 Colorado 17% 373,900 57%
10 Oklahoma 9% 153,400 45%
11 Arizona 9% 242,200 62%
12 Nevada 6% 67,100 100%
13 Washington 5% 155,500 25%
Methodology: Property risk data compiled from Verisk. 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 May 11, 2021, and May 10, 2022.

High levels of drought are especially concerning given the growing number of wildfire disaster declarations. We found that the number of FEMA Wildfire Disaster declarations have increased by 455% between 1980-1999 and 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. LLC has made every effort to ensure that the information on this site is correct, but we cannot guarantee that it is free of inaccuracies, errors, or omissions. All content and services provided on or through this site are provided "as is" and "as available" for use. LLC makes no representations or warranties of any kind, express or implied, as to the operation of this site or to the information, content, materials, or products included on this site. You expressly agree that your use of this site is at your sole risk.