Wildfire insurance: Coverage, costs, and preparedness

Wildfire insurance isn’t a standalone policy but part of your broader coverage under a standard home insurance policy.

According to data from the United Nations Office for Disaster Risk Reduction, the 2025 Los Angeles wildfire was the costliest single event that year. The resulting damage was estimated to be $53 billion, but only $40 billion was insured. 

Such events have made one thing clear to many homeowners: home insurance doesn’t always fully protect you from the financial risks of wildfires. Factors such as coverage limits, exclusions, and rising rebuilding costs all play a role in determining your homeowners insurance payout following a fire.

Does homeowners insurance cover wildfires?

In most cases, homeowners insurance covers wildfire damage. Standard homeowners policies — the most common being an HO-3 policy — include coverage for fire losses from flames, heat, and smoke.

There are important exceptions to be aware of, however. Homeowners insurance in California and certain other high-risk areas sometimes limits or excludes wildfire coverage. And some insurers may require homeowners to pay a separate wildfire deductible, which could be more expensive than the standard deductible that applies to other types of claims. 

What does wildfire insurance cover? 

What’s covered and how will depend on which part of your policy applies if wildfire damage occurs. Standard homeowners policies typically include the following coverage types:

• Dwelling coverage (Coverage A): Pays to repair or rebuild your home and any attached structures, like an attached garage.

• Other structures coverage (Coverage B): Pays to repair or replace detached structures, such as fences, sheds, or gazebos.

• Personal property coverage (Coverage C): Covers belongings damaged by fire or smoke. Typically, personal property payouts are based on the actual cash value (ACV) of your items, which factors in depreciation, unless you add replacement cost value (RCV) coverage to your policy.

• Loss of use coverage (Coverage D): Also called additional living expenses coverage (ALE), this helps reimburse you for hotel stays, meals, and other costs if your home is uninhabitable while being repaired in the event of covered loss.

Although you are less likely to need them following a wildfire, your policy also likely includes personal liability (Coverage E), which pays legal expenses if you or a household member is responsible for someone else’s injury or property damage, and medical payments coverage (Coverage F) to pay for minor medical costs if guests are injured in your home.

Review your declarations page carefully to find out how your policy covers wildfire damage. Doing so can help you identify where there may be gaps in your coverage.

Smoke and soot damage

Notably, smoke, soot, and ash can damage surfaces, air systems, and belongings, even if flames never reach your home. Cleanup and remediation can be costly, averaging $200 to $1,200 per room for smoke damage restoration — though the cost may be higher depending on the extent of the damage and any additional remediation required (such as cleaning HVAC systems). 

Cleanup and remediation are typically covered and are a common source of wildfire insurance claims.

What’s not covered by standard wildfire insurance?

Common policy gaps include:

• Land value: Although insurance helps pay to repair your home, it generally does not cover work needed to restore your land to its previous condition.

• Landscaping: Replacing trees, shrubs, or other vegetation destroyed in a wildfire may be covered, but payouts are often capped at a relatively low amount.

• Post-fire flooding or mudslides: Damage from debris flows or flooding after a wildfire is generally not covered under a standard homeowners policy. You would need to carry a flood insurance or earth movement endorsement or separate policy. 

• Wildfire exclusions: In some high-risk ZIP codes, policies exclude wildfire coverage altogether or cap how much they’ll pay out. 

How much wildfire insurance do I need?

Since wildfire coverage is built into most standard homeowners policies, the foundation of your protection is your dwelling coverage — the part of your policy that pays to repair or rebuild your home's physical structure. If a wildfire completely destroys your home, dwelling coverage is what will fund the rebuild.

That means your dwelling coverage limit is the key number to get right. It should match the cost to rebuild your home — not its market value. Market value includes land, location, and the current real estate market, which aren't part of an insurance payout.

It's especially important to get your dwelling coverage policy limit right in areas where wildfires are common. Keep in mind that after a fire, rebuilding costs could rise quickly due to high demand for contractors and materials. To protect your finances, consider one of two options that many insurers offer:

1. Extended replacement cost coverage: If rebuilding costs exceed your policy limit, extended replacement cost coverage gives you a buffer above your dwelling limit, often by 20 to 25%.

2. Guaranteed replacement cost coverage: This add-on will cover the full cost of your rebuild, minus any deductibles, even if costs exceed your policy limit. 

A licensed agent, contractor, or appraiser can help you calculate an accurate rebuild cost to help determine an appropriate dwelling coverage limit. Also, be sure to review your coverage regularly — especially following home improvements — to make sure you continue to have the coverage you need.

How much does wildfire insurance cost?

Wildfire insurance is usually included in your home insurance premium. How much you’ll pay varies based on factors like:

• Location: Insurers can consider your proximity to brush, heavily forested areas, and recent fire activity when setting rates. Homes in higher-exposure environments typically face higher premiums due to increased ignition and spread risk.

• Fire risk score: This score is based on your home’s location, building materials, vegetation, and historical fire data. You can learn more about your fire risk score on the U.S. Climate Resilience Toolkit website.

• Home characteristics: Home characteristics, such as roofing type, exterior building materials, construction design, and vulnerability to windblown embers, can significantly affect wildfire risk and insurance premiums. Homes built with fire-resistant materials and defensible design features generally cost less to insure.

• Local fire protection: Your distance from a fire station, the availability of hydrants or water sources, and emergency response capacity affect how quickly fires can be controlled and contained, which influences your premium.  

In high-risk areas, especially in California, premiums have increased significantly in recent years. Some homeowners have also experienced nonrenewal or reduced coverage options as insurers pull back from covering wildfire-prone regions. 

What if you can’t get wildfire coverage in your area?

If you have been turned down for coverage, there are usually still options for high-risk areas, although they may differ from standard policies. 

Shop the surplus or nonadmitted market

Surplus lines insurers, also known as nonadmitted carriers, specialize in insuring high-risk properties that have been denied coverage by standard carriers. They feature:

• Flexible underwriting: Risk is assessed on a case-by-case basis, and insurers may be willing to work with you even if you’ve been turned down for coverage elsewhere.

• Higher premiums: Nonadmitted carriers may charge more because they insure higher-risk properties that standard insurers may decline to cover.

• Fewer regulatory constraints: Nonadmitted carriers are not bound by state-filed policy forms or rates, allowing for greater flexibility to tailor coverage to higher-risk or nonstandard properties. However, this can also mean less standardized policy terms and fewer regulatory guarantees compared to admitted market coverage.

Look into your state’s FAIR Plan

Fair Access to Insurance Requirements (FAIR) Plans are administered by state-authorized insurance associations and overseen by each state’s insurance department. Rules, limitations, and coverage varies by state, but FAIR Plans generally offer the following:

• Basic protection: FAIR Plans primarily provide dwelling coverage for properties in high-risk areas, such as those prone to wildfires, tornadoes, and hurricanes. Most  FAIR Plans do not offer coverage outside of basic dwelling insurance. That’s in contrast to standard home insurance policies, which automatically offer more broad coverage, including coverage for personal property and personal liability. 

• Limited scope: FAIR Plans are typically named-peril plans, meaning coverage is limited to losses specifically outlined in the policy, such as fire and lightning, internal explosions, and smoke. That’s in contrast to standard policies, which generally cover losses from all causes except those specifically excluded by the policy (such as flooding). 

• High costs: Because FAIR Plans are for high-risk properties, premiums are generally higher, though costs vary depending on where you are located and how much coverage you need. 

California FAIR Plan

California wildfire insurance is available through the state’s FAIR Plan, which has expanded in recent years as insurers have left the state. In California, the FAIR Plan covers damage caused by fire and lightning, internal explosions, and smoke. Homeowners may need a separate policy to cover liability, theft, and other risks. 

Colorado FAIR Plan

Like California, home insurance in fire-risk areas can be challenging to find in Colorado. The state’s FAIR Plan provides basic property coverage (including wildfire-related losses), but typically, homeowners will need to purchase additional coverage to be fully protected. 

Other wildfire-prone state FAIR Plans

Several other states, mostly in the Western U.S., offer FAIR Plans, including:

• Texas

• Oregon

• Washington

• New Mexico

Availability, coverage details, and eligibility rules vary by state, so it’s important to check your local program for details.

Difference in conditions (DIC) policies

A difference in conditions policy is designed to “wrap around” a FAIR Plan and provide additional coverage to fill in what’s missing from the FAIR Plan policy. For instance, DIC policies may include protection for risks beyond the limited causes of loss (called perils) covered by FAIR Plans.

DIC policies are often more flexible and can be tailored to the homeowner’s specific needs, depending on the insurer. In high-risk areas, many homeowners opt for a dual FAIR Plan/DIC policy approach to achieve broader and more complete insurance protection than can be provided by a FAIR Plan alone. 

Wildfire insurance in California: What you need to know

California’s wildfire insurance market has changed dramatically in recent years, largely due to the increase in wildfires driven by climate change. Wildfire losses and rising costs have reduced coverage availability and increased policy costs. 

Understanding how the insurance system works in the Golden State is essential for anyone navigating California wildfire insurance or looking for California home insurance in high-fire-risk areas.

The nonrenewal wave

Some major insurers reduced their risk exposure in California by pausing new business and choosing to nonrenew policies in the state. California has attempted to address this by offering some protections. For example, in certain areas affected by a declared state of emergency, insurers may be subject to a one-year moratorium on nonrenewals and cancellations, providing homeowners with temporary protection after a major disaster. 

California FAIR Plan

California’s FAIR Plan is the state’s insurer of last resort, designed to provide basic coverage for those locked out of the private market. Here’s how it works:

• Fire-focused coverage: Policies typically cover fire, smoke, soot, and related damage.

• Limited protection: Liability, ALE, or other common coverage options are not included.

• Supplemental insurance may be needed: Many homeowners pair a FAIR Plan policy with separate coverage to provide broader protection when possible.

• Growing reliance: Enrollment in the program has surged as private insurers have pulled back. In fact, from September 2022 to March 2026, enrollment increased by 242%.

Recent updates to California’s FAIR Plan have increased coverage limits, introduced discounts for wildfire mitigation, and improved payment options. 

Proposition 103 and the Sustainable Insurance Strategy

California’s insurance market is heavily regulated. One long-standing law, Proposition 103, requires insurers to obtain state approval before raising rates. This helps limit sudden rate hikes but has led to a diminishing private market, as some insurers find the regulated rates insufficient to offset the multibillion-dollar risks of modern wildfire seasons.

To stabilize the volatile insurance market, the state has implemented the Sustainable Insurance Strategy. This allows insurers to modernize rate-setting tools and strengthen rules around insurer obligations in high-risk areas. Changes like this may encourage insurers to return to the California market in the future.  

IBHS Wildfire Prepared Home

One promising development for homeowners is the Insurance Institute for Business & Home Safety (IBHS) Wildfire Prepared Home designation. The IBHS program recognizes homes that meet specific wildfire resilience standards, including those with: 

• Flame- and ember-resistant vents

• Fire-resistant roofing materials

• Cleared defensible space around all buildings

Meeting these standards can improve your chances of finding coverage, reduce wildfire risk, and even qualify you for insurance discounts. 

The program is available in several states, including Arizona, Florida, Texas, and California. A similar program is California’s Safer from Wildfires initiative, which also encourages mitigation tactics. 

How to reduce your wildfire risk (and potentially your premium)

Reducing wildfire risk can lower insurance costs. Here are a few effective ways to reduce your risk:

• Create defensible space: Clear vegetation and debris around your home to create a buffer and slow the spread of fire. 

• Harden your home against embers: Install ember-resistant vents, a Class A roof, and tempered glass windows, which are more heat- and breakage-resistant. 

• Consider the IBHS Wildfire Prepared Home designation: Earning this credential demonstrates a lowered wildfire risk profile and may improve insurability.

• Understand wildfire defense services: Some insurers offer defense services such as private fire crews, though services are often reserved for higher-value homes. Understanding what’s available can help you choose coverage with added protection.

• Ask about mitigation discounts: Homes that meet specific safety standards, such as IBHS-certified homes or local mitigation programs, may earn insurance discounts. 

How to file a wildfire insurance claim

If you are dealing with the aftermath of a wildfire, you may be overwhelmed or distressed. It’s helpful to know the steps for filing a home insurance claim in advance so you can file promptly and keep your recovery moving forward as quickly as possible. 

1. Contact your insurer. Once you, your family, and your pets are safe, contact your insurer, even if you don’t know the full extent of the damage. They will walk you through the process and outline what emergency expenses are covered in your policy.

2. Document all damage. Take photos and videos of damage before you begin any cleanup. Make a written list of damaged and destroyed items, including estimated values. If you have previously created a home inventory, this step is much easier. 

3. Hold onto all damaged items. Keep damaged items until your insurer says otherwise. They might need to inspect them as part of your claim. 

4. Understand your additional living expenses (ALE) coverage. If your home is uninhabitable, ALE coverage may help you cover the cost of temporarily living elsewhere, up to your policy limits. Save all receipts and ask your insurer to clarify which expenses are covered.

5. Track and meet deadlines. Create a folder for emails, letters, receipts, and other claims-related communications to keep a clear record of every step. Missed deadlines can lead to costly delays or claim disruptions.