Wildfires
Do car and home insurances cover damages caused by the California fires?
While both home and car insurance can cover damages caused by California wildfires, coverage depends heavily on the specific terms of the policy.
Most standard homeowner insurance policies in California include coverage for fire damage, which extends to wildfires. This coverage typically encompasses structural damage, personal belongings, and additional living expenses if the home becomes uninhabitable.
However, residents in high-risk wildfire zones may face challenges securing or renewing coverage as insurers increasingly reassess risks.
Despite coverage availability, underinsurance is a significant issue. Many homeowners find their policies insufficient to cover rebuilding costs after a wildfire. California law requires insurers to provide more accurate replacement cost estimates, but gaps persist. Don’t be surprised to see a slew of stories in future months about insurance claims denied or coverage pulled at the last minute.
Additionally, while fire damage is covered, secondary damages like mudslides caused by post-wildfire conditions may not be unless explicitly included in the policy.
For those unable to obtain private insurance, California’s FAIR Plan offers a last-resort option for basic fire coverage.
How California's FAIR plan works
This insurance program is a last resort for homeowners and businesses unable to obtain fire coverage in the private insurance market.
It offers fire insurance for residential and commercial properties, including single-family homes, condos, and rental units. Applicants must demonstrate they've been denied coverage from multiple private insurers.
As of June 2024, the FAIR Plan has around 408,000 policies in force, a 164% increase since 2019, though this is still less than 3% of the stae's residents.
How car insurance is managed
Auto insurance coverage for wildfire damage depends on the type of policy held. Comprehensive auto insurance typically covers non-collision damages such as fire and smoke damage or destruction caused by falling debris during a wildfire. In contrast, collision-only policies do not cover such incidents. It’s not clear if car insurance will cover the street clearing by bulldozers..
The increasing frequency of wildfires has led some insurers to withdraw from high-risk areas or raise premiums significantly. To address this, California’s Department of Insurance has implemented temporary moratoriums on policy cancellations and non-renewals in areas affected by wildfires.
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