How Does Wildfire Risk Affect Home Insurance in California?

Why Wildfire Risk Matters for Home Insurance

Wildfires pose a growing threat across California—especially in areas with forests, hills, brush, or historic fire activity. As the risk intensifies:

• Insurance companies face much higher claims and payouts
  
  
• Insurers may tighten underwriting standards, refuse new policies, or non-renew existing ones
  
  
• Premiums increase to reflect the added danger and cost of reinsurance
  

For example, after recent severe fires, many homeowners saw non-renewals or massive rate hikes in their ZIP codes.

What Changes in Your Premiums and Coverage

Higher Premiums in High-Risk Zones

Homes in places with high wildfire danger—steep terrain, dense vegetation, or historic fire paths—typically face steeper insurance rates. Insurers must price-in:

• Elevated probability of fire damage
  
  
• Costlier repairs after wildfires
  
  
• The risk of evacuation and associated costs
  

Stricter Underwriting and Exclusions

In regions deemed too risky, insurers may:

• Decline new policies
  
  
• Add more exclusions or limitations
  
  
• Require detailed home mitigation (fire-resistant materials, defensible space)
  

Some insurers have already exited certain areas altogether.

Role of the FAIR Plan as “Last Resort”

If private insurers decline coverage, homeowners may be forced to get coverage through the California FAIR Plan, which provides basic fire protection when other options are unavailable.

But FAIR Plan policies tend to:

• Be more expensive relative to coverage offered
  
  
• Offer limited protections (primarily fire rather than full homeowners coverage)
  
  
• May require “wrap-around” policies to fill gaps like liability, theft, or water damage
  

Discounts for Wildfire Mitigation

A recent regulation in California mandates that insurers offer discounts to homeowners who take risk-reducing measures (retrofits, defensible zones, ember-resistant vents, etc.).

The safer your home, the more likely you’ll qualify for better rates—even in fire-prone areas.

Regulatory Protections and New Laws

• Moratorium on Non-Renewals: After catastrophic wildfires, California sometimes imposes a temporary ban on insurers canceling or non-renewing policies in affected areas.
  
  
• Advanced ALE (Additional Living Expense) Requirements: Insurers must provide advance payments for temporary living expenses if wildfire makes your house uninhabitable.
  
  
• Mandate for Insurers in High Fire Areas: New regulations require insurers to issue and maintain a certain share of their statewide policies in high wildfire-risk areas.
  

These measures aim to stabilize access to insurance for homeowners in fire-prone zones.

What Homeowners Should Do to Protect Coverage

• Harden your home: ember‑resistant vents, Class A roof materials, non-combustible siding, defensible space
  
  
• Maintain your property: clear brush, remove dead vegetation, clean roof gutters
  
  
• Ask your insurer what mitigation steps they reward with discounts
  
  
• Compare quotes across insurers for the best coverage options
  
  
• If declined by private carriers, explore the FAIR Plan with supplemental protection
  

A knowledgeable broker like eWay Insurance can help you determine what steps will make the biggest impact and match you with carriers still writing policies in your area.

Frequently Asked Questions

1. Will wildfire always be covered in my homeowners insurance?
Most standard homeowners policies do cover fire and smoke damage, including from wildfires. However, coverage may be limited based on policy exclusions or caps.

2. Can my insurer refuse to renew my policy because of wildfire risk?
Yes, unless temporary state moratoriums are in place, insurers can choose not to renew policies in areas they deem too risky.

3. What’s the FAIR Plan and how is it different?
The California FAIR Plan is a last-resort insurance option for homeowners who can’t get coverage through the private market. It offers basic fire protection but often lacks full coverage and needs supplemental policies.

4. What discounts can I get for wildfire mitigation?
Under state regulations, insurers are required to provide discounts to homeowners who take risk-reduction measures—such as hardening the structure or maintaining a defensible perimeter.

5. How much more expensive is insurance in wildfire zones?
Rates can rise dramatically in high-risk areas, in some cases by 40–50% or more, especially if private coverage is unavailable and the FAIR Plan is the only option.

Final Thoughts

Wildfire risk is changing the way insurance works in California. Whether you’re in a hillside neighborhood or a rural community, understanding your risks and options is essential.

At eWay Insurance, we help you protect what matters most—even in high-risk areas. We compare policies, guide you through discounts, and help you find comprehensive coverage—even if you've been dropped or denied elsewhere.