Does Homeowners Insurance Cover Fires, Smoke and Wildfire?

Most homeowners insurance policies will reimburse you for damage from accidental fires and the resulting smoke damage. If you live in an area that naturally or regularly gets wildfires, then you may need to work harder to find an insurer and to take more precautions with the clearing around your house.

How Does Homeowners Insurance Cover You From Fire & Smoke Damage?

Standard homeowners insurance policies will reimburse you for three major types of coverages, and one optional coverage if you have it, up to your limits.

What You Can Get Reimbursed For

You’re covered for accidental fires, sudden and accidental damage by smoke, fires caused by lightning strikes, and in certain cases, wildfires. Note that any fires deemed to have been started by you purposefully are not covered. Neither is smoke damage from people using cigarettes over the years in your house. We’ll discuss wildfires more in the next section. Here are examples of damages you could submit under each type of coverage:

  • Dwelling Coverage: cost of repairs to the singed or burned away portions of the house, whether they’re for contractors or plumbers. If your house is completely burned to the ground, they’ll pay you a lump sum for the house, up to your limits. Also covers smoke damage to the house itself. Payment is typically either for the actual cash value or replacement cost.
  • Personal Property: replacing your clothing, furniture, and other belongings after a fire. Individual types of valuables may be treated differently; for example, valuable jewelry could (and should) have been listed out with individual coverage amounts for each (known as a schedule or endorsement).
  • Liability Protection: lawsuits and related damages for an isolated fire spreading from your house to a neighbor’s property
  • “Loss of Use” or “Additional Living Expenses” (optional): your insurer will reimburse you for temporary lodging and food costs during your evacuation, usually for anywhere from 10% to 30% of the dwelling limit. Definitions of allowable expenses differ.

How Much You Can Get Reimbursed For

Insurance will pay up to the max protection (or limit) you have for each coverage, less your deductible. Let’s say your policy has a $1,000 incident deductible for $100,000 of dwelling coverage with replacement cost, $50,000 of personal property, $300,000 of liability protection, and $20,000 of loss of use coverage. We'll discuss a couple of extreme examples to show you how varied the payment experience could be.

Your adjuster or contractor estimates that your house had a fair market value of $125,000 to repair or replace, but your insurer can write you a max check for $99,000. You’re stuck with making the $99,000 work, or putting in $26,000 of your own money to build an exact replacement. Your insurer may also go through your list of belongings and think you overestimated values for your top-of-the-line kitchen fixtures and handmade furniture, and pay you out $40,000 to replace this. You’d be out $10,000 in value but you fight it with proof and independent adjusters' evaluations.

This excerpt (from the dwelling portion of a homeowners insurance claim for significant fire damage) shows how detailed these lists can be:

Item DescriptionQuantityUnit CostTotal Cost
Replace Plaster Ceiling 165.00 [email protected]  $14.50  $2,392.50
Replace Plaster Walls 111.00 [email protected]  $14.50  $1,609.50
Replace Partial Wall Insulation 206.00 [email protected]  $1.25  $257.00
Replace Drywall Walls 328.00 [email protected]  $3.00  $984.00
Replace Wood Floor 165.00 [email protected]  $10.50  $1,732.00
Replace Carpeting 22.00 [email protected]  $36.00  $792.00
Replace Window 2.00 [email protected]  $575.00  $1,150.00
Paint Ceiling & Walls 601.00 [email protected]  $1.00  $601.00
Paint Trim 1.00 [email protected]  $249.00  $249.00

Continuing with our example: You can’t live in the house until the fire damage is repaired, so you have up to $20,000 in this example to stretch over the variable time of construction. You can blow it all on a luxury retreat, and then spend time for free with family up to $20k, or you can live frugally while construction rapidly finishes, and just submit receipts for $5k. Your insurer may also pay you upfront, or require documentation and reimbursement after you pay first - we’d recommend checking your policy and speaking with your agent. Or, let's say the wind blew flames to your neighbor’s house, 20 feet away, and burned it down to the tune of $350,000. They could file a claim against your liability coverage to recuperate the $300,000, and take you to court for the remaining $50,000.

Homeowners Insurance If You Live in a Wildfire Area

If you live in a wildfire area, you may have to work more to get homeowners insurance. Major insurers are reluctant to issue new policies in areas that they know are high at risk for wildfires - they may have too many homes insured already there. You’ll have to provide your zip code to different insurers to check if they’re willing, or speak with an independent agent. They’d know of smaller companies that can take on the wildfire risk.

During the October 2017 wildfires, we found that getting homeowners quotes in California was difficult with some zips in Los Altos, and the Los Altos Hills areas through one major insurer. There were moratoriums on a long list of zip codes in Anaheim and Napa Valley too. Other insurers, like Farmers, told us they could bind in certain wildfire areas through a hybrid policy: one that insures against fire damage to your physical dwelling from the California FAIR Plan, with a normal homeowners insurance policy for everything else.

Houses in outlying areas closer to vegetation and forests (ex: foothills, canyons, or brush areas) will also have a tougher time, or be more expensive, than properties in the center of town. That’s because proximity to more trees and shrubs, especially dry ones, will create a better path for fires to move, and therefore a greater chance that they’ll engulf your house.

Lastly, we would urge you to consider getting insurance in place as soon as possible, and even if you don’t think you’re in wildfire territory. Once an advisory is out, insurers will reduce or issue a moratorium on new policies. Binding restrictions (a refusal to do policies in certain zip codes) won’t be lifted until after the wildfire is gone.

How to File a Claim for Fire, Smoke or Wildfire Damage

After you have found safe shelter and the danger is over, we would recommend you file a claim with your insurer and begin to inventory the damage.

  • Take multiple photos and videos documenting the fire’s destruction
  • Consult your original list of belongings or old photos of the house, and pull together a list of your belongings and property with estimated values. Consult old receipts if you had them scanned, or look through older credit card statements for the purchase price
  • If you have loss of use or additional living expenses, start keeping track of receipts, and ask your insurer how best to get reimbursed. Can they do monthly after the credit card statements come through, or do they want all at once, or are they going to give you the cash upfront?
  • Keep a record of all claims and damage related notes, including dates and discussions summaries with named individuals. It’ll be helpful to look back to when the process gets too long to remember

You'll likely be swarmed by public adjusters and scammers alike. We’d advise you to be on the lookout for all the documents they push you to sign. You could potentially sign away your right to receiving payment and benefits if you don’t read the fine print. Ask for their license numbers, their references, if they’ve worked with your insurer and who they know in the claims department. And then check your state’s license database and follow up with their references. If they’ve been in the business long enough, they should be able to rattle off the correct names easily. It not completely conclusive, because scammers can provide fake names, but it gives you some names to check with your insurer.

For more information, read about the financial steps to take during a wildfire here, or if you're concerned about fire damage as a renter here.

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