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."
Sign up for Kiplinger’s Free E-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
-
April RMD? Five Tax Strategies to Manage Your 2025 IncomeTaxable Income The April 1, 2025, deadline for required minimum distributions (RMDs) is fast approaching for retirees who turned 73 in 2024.
-
Rising AI Demand Stokes Undersea InvestmentsThe Kiplinger Letter As demand soars for AI, there’s a need to transport huge amounts of data across oceans. Tech giants have big plans for new submarine cables, including the longest ever.
-
What Can a Donor-Advised Fund Do for You? (A Lot)DAFs and private foundations go about helping charities (and those who donate) in different ways. Each comes with its own benefits and restrictions to navigate.
-
6 Great Vacation Ideas for Wheelchair UsersThese six places provide plenty of travel inspiration for people who use wheelchairs.
-
Is Chasing the American Dream Ruining Your Financial Life?Too many people focus on visible affluence as a marker of success. Here's how to avoid succumbing to the pressure and driving yourself into debt.
-
What the Senate's Vote to Repeal CFPB Bank Overdraft Fees Cap Means For YouThe Senate voted to overturn the Consumer Financial Protection Bureau's cap on overdraft fees. Here's what you need to know.
-
These Eight States Have the Most Expensive Home Insurance in 2025If you live in one of these eight states, you’re probably paying $1,000 or more above the national average for home insurance.
-
Charitable Contributions: Five Frequently Asked QuestionsMake the most of your good intentions by understanding the ins and outs of charitable giving. A good starting point is knowing what's deductible and what isn't.
-
How to Delete Your 23andMe Data23andMe is pursuing a sale after filing for bankruptcy, leading many customers to look into deleting their data from the company.
-
Can You Be Fired for Going to Work When You're Contagious?What's an employer to do when an employee shows up at the office with a cold or the flu and spreads germs to co-workers?
