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As wildfires continue to burn across California and the West Coast, thousands of homes are experiencing total loss or damage. If your home suffers damage, your home insurance policy may offer wildfire coverage. The level of coverage you’ll receive varies depending on factors including where you live and the value of your home.
To make sure you’re fully protected against wildfires, consider what your home insurance covers, and which additional policies and add-ons can make sure you have adequate protection.
A standard homeowner’s policy typically covers damage from wildfires. Your insurance company will pay to rebuild or replace the structures of your home, including any outbuildings like a garage or shed.
A cash value policy will replace your home and contents, minus any depreciation. Alternatively, replacement value coverage covers costs up to the amount you select when purchasing your policy, any additional costs will need to paid out-of-pocket. For example, if your policy states total replacement value coverage up to $250,000, but it costs $300,000 to rebuild your home, you’ll be left with $50,000 in out-of-pocket costs. This type of policy is more expensive, but is less likely to leave you underinsured.
Some policies allow you to opt into extended replacement cost or guaranteed replacement cost for an additional charge, ensuring any extra costs are covered. That might mean you could get extra money to not just rebuild or repair your home but to also add on green upgrades or repair with newer or safer materials.
Coverage for your personal belonging should be covered under your standard homeowner’s policy. But first check your policy for any personal property limits that apply to specific items, like jewelry. And if you need extra coverage for high-priced valuables, consider a valuable personal property add-on that allows you to insure specific items at their appraised value.
If you have to relocate during the rebuilding or repair of your home, this coverage can help cover the cost of temporary living arrangements, like a hotel. This coverage is included in your homeowners policy, but generally has low coverage limits. If you expect high living expenses while you’re out of your home, increasing your limits for a few extra dollars a year may be worth the cost.
To ensure your car is covered if it’s damaged or destroyed in a wildfire, consider opting into comprehensive car insurance coverage. You might need this coverage if your car was in the garage or driveway while your home caught fire, for example.
For context, in 2017, the average homeowners insurance policy cost $1,211 per year, according to the Insurance Information Institute. However, how much you’ll pay comes down to where you live, the price of your home and your personal details. These factors are calculated into your final cost:
Finding a standard homeowners insurance policy in areas prone to wildfires has become increasingly difficult and expensive, and cancellations and nonrenewals have become an unfortunate consideration.
However, in states like California, insurers are temporarily banned from canceling homeowners’ policies in fire-prone areas. It’s important to note that the ban is only valid until December, 2020, and it’s unclear if it will be extended.
If you can’t find a standard insurer willing to offer home insurance coverage in your area, you can:
Imagine how devastating it would be to think you were fully covered, only to find out your claim only covers part of your rebuilding costs. This is called underinsurance, and you can avoid it by taking these steps:
There are a few situations where you won’t be covered. Review your policy exclusions to make sure you’re aware of all circumstances when your payout might be denied. Here are some of the most common related to wildfires:
If you need to make a home insurance claim after wildfire damage, keep these tips in mind:
A rejected claim can sting to say the least, but luckily there is a rather generous appeals process. Here’s what you need to do to keep your claim alive:
Wildfires can devastate your family, finances and home. The right home insurance can help you rebuild, as long as you can find an insurance company that will cover you. Compare your home insurance options to find the right coverage for you and your home.
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