Do Wildfires Have You Worried About Your Insurance Coverage? Here's What to Do
With the California wildfires causing billions of dollars in damage, now is a good time to assess your homeowner's insurance and ensure it covers disasters.
The California wildfires have caused at least 24 deaths, billions of dollars in damage and destroyed up to 12,000 homes according to CNN. They also serve as a reminder to homeowners across the country that disasters can happen at any time, and it’s vital to have the right insurance coverage to pay for perils.
That is, if you can secure coverage.
The Senate Budget committee had a series of hearings throughout 2023 on how climate change impacts the insurance market. In their December 2024 staff report, they concluded, "Climate-related extreme weather events will become both more frequent and more violent, resulting in ever-scarcer insurance and ever-higher premiums."
From just $107.88 $24.99 for Kiplinger Personal Finance
Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Their studies also found that home insurance premiums rose 40% faster than inflation. That means being proactive in checking that your coverage is still comprehensive for your risk factors and reshopping home insurance before your policy renews are essential to keeping costs low. Consider this advice in assessing your coverage.
How homeowners insurance covers fire damage
In many areas of the country, your homeowners insurance protects your home and its contents against perils like fire. In turn, if a wildfire occurs and damages your home, you could receive compensation for those losses under different coverages in your policies.
Here’s a breakdown of what insurance covers:
- Dwelling coverage: Protects any damage incurred to your home and its attached structures, like a deck or garage.
- Personal property: Any property damaged from the fire such as clothing, electronics and furniture are usually covered. It’s ideal to take a video of your home at least once a year so you have an inventory of all items impacted.
- Additional living expenses: If your home becomes uninhabitable due to fire, your insurance policy could pay for you to rent another home while awaiting repairs completed. It can also cover hotel costs, extra gas expenses (if you commute further to work) and additional food costs.
Since policies vary by state, reading your policy documents can help you note any exclusions that apply to your coverage. You can also contact your insurance carrier to ensure you have coverage for wildfires, floods or other climate-related events.
However, if you live in an area prone to wildfires, finding coverage will be more difficult. The California Department of Insurance backs this up, reporting insurance carriers declined to renew up to 2.8 million policies between 2000 and 2022. For example, State Farm dropped 1,600 policies in the Palisades area back in July 2024, according to Euronews.
How to get insurance in risk-prone areas
If you live in an area susceptible to wildfires, obtaining insurance isn’t easy or cheap.
First, you’ll want to review your policies to see if they have exclusions for events common in your area like wildfires or floods, and if they do, shop around to see if another carrier in your area offers coverage. Keep in mind that some insurance companies might offer coverage, but the costs might make the policy financially unfeasible for many households.
Another option is to consider your state’s Fair Access to Insurance Requirements (FAIR) plan. These plans accord homeowners with coverages for wildfire, high wind events or vandalism at higher prices and lower policy limits (damages paid out) than standard homeowners policies.
Thirty-five states currently have FAIR plans in place, according to the Insurance Information Institute. The number of households having to turn to it is also increasing, with Euronews reporting 2.7 million homeowners using FAIR plans in 2023. That’s up from 1.4 million homes covered in 2020. And with severe weather events becoming more common, the safe bet is that more homeowners will move to FAIR coverages moving forward.
The bottom line
The California wildfires are a stark reminder to make sure you have the coverages you need in place, especially if you live in an area prone to wildfires or other severe weather events.
With many insurance carriers dropping coverage on account of it being too expensive, exploring other options can give you peace of mind you have the financial protection you need if the unthinkable happens. Of course, having insurance coverage will not fix the psychological impacts of a natural disaster, but at least this is preparation you can take to give yourself one less thing to worry about in case of disaster.
You can see options for home insurance rates here, with this tool:
Related content
-
Why Public Markets Don't Look Like They Used To -
Turning 65 in 2026? Here Is Exactly How to Sign Up for MedicareWhether you’re months away from your 65th birthday or plan to work past retirement age, here are the steps to secure your Medicare coverage and avoid costly mistakes.
-
A Free Tax Filing Option Has Disappeared for 2026: Here's What That Means for YouTax Filing Tax season officially opens on January 26. But you'll have one less way to submit your tax return for free. Here's what you need to know.
-
6 Financially Savvy Power Moves for Women in 2026 (Prepare to Be in Charge!)Don't let the day-to-day get in the way of long-term financial planning. Here's how to get organized — including a reminder to dream big about your future.
-
Countries That Will Pay You to Move: Cash Grants, Incentives and What to KnowExplore real relocation incentives — from cash grants and tax breaks to startup funding — that make moving abroad or to smaller towns more affordable and rewarding.
-
Mortgage Protection Insurance: What It Covers and When It Makes SenseHow mortgage protection insurance works, what it costs, and when it’s actually useful in a financial plan.
-
How to Use Your Health Savings Account in RetirementStrategic saving and investing of HSA funds during your working years can unlock the full potential of these accounts to cover healthcare costs and more in retirement.
-
Forget Job Interviews: Employers Will Find the Best Person for the Job in an Escape Room (This Former CEO Explains Why)Escape rooms can give employers a better indication of job candidates' strengths than a standard interview. Here's how your company can get on board.
-
8 Things You Need to Stop Wasting Money on in 2026Want to get your finances in shape this year? Start by cutting out these sneaky sources of waste in your budget.
-
The December CPI Report Is Out. Here's What It Means for the Fed's Next MoveThe December CPI report came in lighter than expected, but housing costs remain an overhang.
-
Billed 12 Hours for a Few Seconds of Work: How AI Is Helping Law Firms Overcharge ClientsThe ability of AI to reduce the time required for certain legal tasks is exposing the legal profession's reliance on the billable hour.
