If you live in an area at risk for wildfires, it’s important to have wildfire home insurance. This coverage can help you rebuild your home, repair damage from smoke, and pay to remove debris caused by a fire.
In recent years, wildfires have posed challenges for homeowners insurance markets. They have caused premiums to rise, deductibles to increase, and sometimes policies to be denied or dropped.
Loss of Value
The structure is the most obvious loss from a fire, but it’s important to note that wildfires also cause considerable damage to personal property. This can include jewelry, antiques, valuable art collections, and other heirlooms that can be difficult to replace.
If you are in a high-risk area for fires, it’s important to ensure that your home is properly insured with wildfire home insurance to cover the replacement cost of your property in the event of a total loss. That means setting your dwelling insurance limit high enough to rebuild your home at today’s prices for construction and labor.
A replacement cost coverage endorsement can increase your limit by 25% or 50%. It’s also important to check your policy for a guaranteed replacement cost or updated building code coverage, guaranteeing you the money to rebuild your home at current codes.
Another option is to purchase loss-of-use coverage, which pays for hotel stays and other expenses incurred while you cannot live in your home due to wildfire damage. Being a renter can help you pay your mortgage and other bills while living in a temporary housing situation during reconstruction.
Liability
Regarding home insurance, it’s not unusual for homeowners to worry about property losses. One of the most common concerns is damage to your belongings, which can result in expensive restoration costs for items such as furniture, clothing, electronics, and appliances. The most important thing to do is ensure you have adequate asset coverage. One of the perks of having an insurance policy is that you can shop around for the best rate, which can help you save money in the long run. For example, if you’re in the market for a new home or a replacement car, compare rates with an insurance professional’s help. You’ll also want to ask your insurance agent about coverage options that will cover your losses in the event of a wildfire.
Damage to Outbuildings
A fire on your property can damage any buildings not part of your main home, like sheds and garages. The best way to avoid this damage is to ensure you have the right fire insurance for your outbuildings.
A standard home policy covers outbuildings by up to 10% of the dwelling coverage limit. That means that if your dwelling limit is $300,000 and you have a shed worth $30,000, the most your insurer will pay you for fire damage to your shed would be $30,000.
Some policies offer additional coverage that pays the cost of rebuilding these structures, so check your options when shopping for coverage. Generally, this covers the cost of construction, including materials and labor. It also covers updated building codes during a rebuild so that the new structure is built according to current standards.
It may also cover the cost of temporary housing, food, and other expenses if you need to relocate while your home is being repaired. This coverage is called loss-of-use or additional living expense, and it’s a good option for homes in wildfire-prone areas.
Damage to Neighbors’ Properties
If a neighbor’s property is destroyed by fire, they will likely seek compensation from the homeowner. This can happen if the person was negligent in preventing the fire from spreading to their property, if they failed to take precautions to prepare for wildfires, or if they neglected to maintain their homes in a way that would prevent them from becoming damaged by a wildfire.
Fortunately, homeowner’s insurance policies are designed to protect both homes from the risk of fires that may occur in nearby areas. The policy also covers the cost of repairing or replacing property damaged by fire.
The loss of use category is another important consideration regarding homeowner’s insurance. It pays for living expenses such as temporary housing, hotel or short-term rental costs, food, and laundry while a property is being repaired or rebuilt.
While most homeowners’ insurance policies include this coverage, it is also a good idea to consider additional living expense coverage. This can pay for hotels, food, and laundry when a property is repaired or rebuilt following a fire.
A fire can be a devastating event for any homeowner, and it is especially so if the homeowner lives in an area that is susceptible to wildfires. With so many properties being lost to wildfires in recent years, it is important for homeowners to understand the risks of not having wildfire home insurance and to make sure they have it in place if they live in a wildfire-prone area.
