Why Get Wildfire Insurance?

In 2009, over 30,000 residents in Santa Barbara County, California, were affected by devastating wildfires, according to CNN Money. Wildfires begin relatively unnoticed and tend to spread quickly. Carrying an adequate wildfire insurance plan can provide financial relief for both living expenses and rebuilding a home damaged by the fire.

Wildfire Insurance Coverage

Fire damage---which encompasses damage done by wildfires---is one of the most common risks of owning a home. According to CNN Money, most home owners insurance policies include fire damage as part of the standard coverage. However, homeowners living in regions susceptible to wildfires should shop around and purchase a policy that will cover losses specifically associated with property damage in regions at risk for wildfires.

Replacement Cost vs. Cash Value

Home owners insurance policies typically provide for two types of benefits: replacement cost or cash value. A replacement-cost insurance policy in an area susceptible for wildfires is more beneficial than a cash value policy. Replacement-cost policies provide money to pay for rebuilding and replacing what is lost---not just money to pay for the actual value of the land. According to CNN Money, it is common for a home to be worth hundreds of thousands of dollars (the actual value) but to suffer more than a million dollars worth of damage in a wildfire; the replacement cost would help cover the devastating impact of the wildfire.

Living Expenses

A lesser known caveat in many home owners insurance policies with comprehensive fire coverage is reimbursement for living expenses. During a wildfire it may be necessary for the homeowner to evacuate the property. In the aftermath, the owner and his family may need to live in hotels and eat at restaurants. An insurance policy may provide for reimbursement for those types of expenses. The owner should read the fine print of his policy carefully, however, and update as needed.

Areas Susceptible to Wildfires

The western United States is generally associated with wildfire risk. However, wildfires are a nationwide occurrence. In regions with high temperatures and dry weather, owners living in heavily wooded areas with a large coverage of underbrush, can fall victim to a wildfire. Owners should assess where they live against the risk of fire then talk to an insurance agency about the type of coverage available that will best protect their properties.

References

• Insure Me: Wildfires and Your Homeowners Insurance
• CNN Money: Wildfire: Insurance When All is Lost; Sarah Max; 2003
• USA Today: Sifting through the Ashes; Elizabeth Weise; 2007
• Disaster Center: Wildfire
• Rocky Mountain Insurance Information Association: Wildfire
• CNN: Wildfire Continues Roaring Through Southern California; 2009