News Room

What Consumers Should Know About Wildfire Insurance

Written on behalf of Brian Kabateck
July 27, 2018

A record-breaking heat wave that hit Southern California not only brought high temperatures to the region, but it also brought wildfires. A fire broke out in Santa Barbara County dubbed the “Holiday Fire”, and a brush fire came dangerously close to the Griffith Observatory. With more fires anticipated this season, homeowners in California are just beginning to comprehend the devastation as they start to try and fix or rebuild their damaged property. The process of dealing with insurance companies following a wildfire can be exhausting, especially if you encounter denial of coverage by an insurance company that looks for ways to escape its obligation to pay you for a claim. Consumers who live in an area at high risk of fires should be prepared, and should make sure they have enough insurance, and what the protocol is after the damage has been done.

Many homeowners are finding that their current insurance company are not offering renewals because their home is located in a high-risk fire or brush area. New home buyers in those areas are finding that getting the right coverage can be tough. If you own a home in these areas, many companies may not be willing to write coverage for you. Insurance companies claim that wildfires in California have become so widespread and that the number of claims is so high, it makes it difficult to conduct business in the state. Insurers are using computer models to assess the risk of fires in certain areas and for individual homes and are deciding that they are exposed to too much risk.

It’s important that homeowners understand their insurance policies and ensure they have enough coverage. Wildfires are a “covered peril” in most homeowners’ insurance policies. Many homeowners do not have enough insurance to rebuild their home because although construction costs have increased substantially over the last two decades, most homeowners’ coverage has not. The policy should also cover accommodations while a homeowner is displaced until the house is repaired or rebuilt.

Governor Jerry Brown recently signed two bills that would provide additional consumer protections in the aftermath of the massive October wildfires, where many homeowners found themselves underinsured. Governor Brown signed AB 1799, which would mandate the specific information carriers are required to provide to fire victims after a loss. It includes the full insurance policy, any endorsements to the policy and the declarations page. Some victims claimed they had trouble accessing those documents from their companies after the destructive fires. He also signed AB 2229 which would require insurers to disclose any fire safety-related discounts offered by them. The bill will go into effect in 2020.

Dealing with insurance companies after a wildfire can be very stressful for homeowners, and they can find themselves struggling to secure affordable insurance or any policy that may be able to help them. Having to pick up the pieces after your home has been damaged or destroyed by a wildfire can be rough. But knowing what your insurance covers and what may not be covered may help you be better prepared.