Learn the basics of wildfire insurance, including key risk factors and tips for getting the right coverage at the right price.
More than 4.5 million U.S. homes are considered at high or extreme risk of wildfire, according to research from Verisk Analytics.
For landlords in California, Oregon, Nevada, Washington, and other wildfire-prone regions, this poses unique challenges when it comes to insuring rental properties. Although wildfires are part of the natural landscape in these western areas, fire season is starting earlier and ending later each year — in large part due to the ongoing effects of climate change. Now more than ever, landlords must take action to protect their properties and tenants before a blaze strikes.
Here, we’ll break down what landlords need to know about wildfire insurance, which risk factors insurance companies look for, and tips for getting the right wildfire insurance coverage at the right price.
Although many homeowners have fire damage covered as a peril in their regular insurance plans, this can vary based on insurance carrier or geographic location. As a result, it’s absolutely essential that landlords check their policy or consult their insurance agent first to understand whether wildfires are included in their coverage.
Like other coverage, wildfire insurance policies vary depending on carrier and location. For example, they may cover the entire dwelling or require separate policies for the dwelling and roof. Assuming that a wildfire is a covered peril in your landlord insurance policy, you are also covered for personal property, loss of rent, structural damage, and more when you file a claim (as long as your policy includes coverage for these elements of the property). Some wildfire insurance policies may have a separate wildfire deductible, which may be higher.
That said, some insurance carriers will cover your property from regular fires but specifically exclude wildfire damage for properties in certain zip codes, geographies, or even during certain times of year. In this case, landlords need to invest in separate wildfire insurance policies on top of other standard policy coverage. That said, some carriers may allow landlords to add wildfire insurance by endorsement, while others may not.
For landlords who aren’t covered in the event of a wildfire, or can’t get an endorsement for their policy, there is always the option to buy independent wildfire insurance. Annual premiums for wildfire coverage can range from $1,000 to more than $5,000 for the average single family home. For higher-value properties in states like California with coverage up to $1M, your annual premium could be as high as $40,000. Rental property owners should note that these figures will likely only increase as wildfires become more frequent and severe.
Another key consideration when it comes to wildfire insurance is whether or not your policy includes coverage for smoke damage. In this case, landlords should inquire about adding smoke damage as extended coverage or an endorsement while also confirming that wildfire is not excluded.
If you’re unable to get insurance because you’re in a high-risk wildfire zone, you can also opt for a Fair Access to Insurance Requirements (FAIR) Plan in states like California. While this offers less coverage, it’s a state-sponsored program designed to ensure high-risk properties are still insurable. This type of coverage also applies to coastal properties at risk of hurricanes or other hazardous situations.
The key to finding the best wildfire insurance? Clear communication with your agent and a full understanding of what your insurance actually covers. Below are three tips for landlords looking for comprehensive, cost-effective wildfire coverage.
As a landlord, it’s your responsibility to understand your insurance policy inside and out. Carefully review your coverage and talk to your agent to answer questions like: Does this coverage only protect my rental property, or does it include my tenants’ belongings? If there is wildfire damage, what can I claim (e.g. rental income losses)? Knowing the answers to these questions will make all the difference in an emergency situation.
Evaluate your wildfire insurance coverage each year to ensure that you fully understand the policy and haven’t missed any new changes. Maybe your carrier no longer offers protection against smoke damage, or has increased the deductible. This is crucial to know ahead of time so you don’t have to scramble in an emergency situation should you need to make a claim.
Historically, wildfires are most likely to happen between May and October. However, the wildfire season has been getting longer as a result of climate change — with blazes appearing as late as December in 2020. As a result, it’s important to avoid shopping for insurance during peak season so insurers don’t think you’re trying to get a new policy just to file a claim right away.
Even if you’re able to secure a comprehensive wildfire insurance policy, it’s best to take steps to protect your rental property from wildfire damage. Here are a few tips to mitigate potential risks and educate your tenants about wildfire safety.
Though you can’t predict when a wildfire will strike, you can be prepared in advance. The key is being proactive and staying attentive to how you can minimize the need for a claim. Mitigating risk begins with taking precautions — including fireproofing your property’s exterior, regularly clearing brush, and setting up firebreaks. Rental property owners should also be sure to store flammable items like gasoline cans in a heat-safe container off of the ground and away from flammable structures as much as possible. If you’re purchasing a rental property in a wildfire-prone area, check where the closest fire stations are — this may even help lower your premium.
Renters insurance is a crucial part of protecting your rental properties, especially in wildfire-prone areas where tenants and their possessions are at risk of damage that may not be covered under your landlord policy. As a landlord, you should encourage or even require tenants to protect themselves and their belongings by investing in renters insurance. Looking for a carrier to recommend tenants? Azibo partnered with Sure to offer renters insurance policies with plans as low as $8/month.
It’s not enough to be prepared for wildfires as a landlord — you also need to inform your tenants and, if you don’t self-manage, your property managers. This means preparing them for what to do or who to call if there is a suspected wildfire, sharing best practices on how to protect their possessions, and reminding them to check what’s covered under their renters insurance. If tenants are also responsible for maintaining the rental property, remind them to clear brush, mow high grass, and store flammable materials in non-flammable areas. This helps minimize risks if you live far from your rental properties and can’t regularly check on them.
Wildfires start quickly and can consume a property in a matter of minutes. Both rental property owners and their tenants should take photo evidence of their property and possessions in advance to help insurance carriers assess the damage at a later date. Don’t wait till wildfire season to take photo inventory and create an itemized list — it’s best to be prepared before a blaze strikes.
Azibo can help you demystify the complex world of wildfire insurance by guiding you to find the right plan for the right price. Our expert insurance team will:
Be prepared when wildfires strike. Mitigate risks and find the right wildfire insurance at the right price — beginning with a free quote from Azibo today.
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