Home Insurance in Wildfire Zones

Across the country, insurance companies have responded by increasing prices in high-risk areas and in some cases non-renewing homeowners insurance policies for entire counties and portions of western states. Unlike coastal areas where it known that homeowners insurance can become complicated, many homeowners in areas now considered brushfire zones never thought they would be at risk for insurance cancellations. The U.S. Forest Service, the federal agency in charge of fighting wildfires and other federal agencies reported a cost of $2.9 billion in fire suppression alone in 2017 and that number is expected to grow significantly for 2018. The damage to the environment, the loss of lives and damage to property has lead some states to implement programs that give tax subsidies to people in high risk areas who clear brush and make the area less likely to experience these large losses. In terms of the damage to the economy, an analysis in November of 2018 by the Department of Commerce places the annual cost of wildfires to be between $71.1 and $347.8 billion. This accounts for direct and indirect losses such as losses to the tax base, tourism and deaths.

The demand for high risk homeowners insurance policies will continue to increase as brushfires become more prevalent across the country. The changing landscape of the insurance industry and new underwriting guidelines will be an ongoing challenge for homeowners. Consumers need to find an agent with the right resources and access to the right companies to insure their homes. The private insurance market will find ways to adapt to these challenges, and with the right agent, consumers can avoid the high cost and substandard plans that many people purchase, assuming there are no other options.