What homeowners need to know about wildfire coverage

California’s rash of wildfires are prompting tens of thousands of evacuations, as well as damage to houses and other property.

Homeowners who live in areas like California that are at risk for wildfires may be wondering whether their homeowners’ insurance covers fire damage or destruction. The good news: Homeowner’s and renter’s insurance tends to be fairly comprehensive when it comes to natural disasters, although you need to be aware of some nuances, said Carole Walker, the executive director of the Rocky Mountain Insurance Information Association.

The frequency of wildfires is increasing in the Western states, with the annual number of large fires almost doubling since the 1980s. Scientific American points to global warming as leading to larger and more intense wildfires. So homeowners in areas at risk for wildfires should examine their policies annually to make sure they’re adequately covered, Walker noted.

“Anytime that we have these headline-making catastrophic wildfires or you can smell the smoke, that’s when people are getting that teachable moment, to realize how would I be financially prepared,” she said. “It’s a wakeup call. We have seen these risks increase.”

Here are some pointers on what to review and look for:

An annual assessment. Reviewing your homeowner’s insurance annually is important in case you’ve remodeled or upgraded your home because that could increase the cost to replace it if lost in a wildfire, Walker noted. “Policies now require you to update the coverage on an annual basis,” she said. “The insurance company doesn’t care about the resale value, but the cost to repair and rebuild in today’s dollars, and that can change.”

Law and ordinance coverage. Examine your policy’s law and ordinance coverage because that will protect a homeowner in case a rebuilt or repaired home needs to meet new building codes, which generally adds expense to the process. “How would I be covered if I lost my home and there are changes to the building code? You may have have built your home 20 years go, and city and county made code upgrades, so does your insurance also have law and ordinance coverage?” Walker said.

Your home’s contents. Check whether the contents of your home are adequately covered. A typical homeowner’s insurance policy will cover your belongings at about 50 percent to 70 percent of the value of the home itself, but Walker noted that consumers may forget about valuable items such as jewelry or art. In the case of expensive items, work with your insurance company to add a separate rider to cover them. This will involve securing an appraisal for the items.

Additional living expenses. This covers homeowners when they aren’t able to live in their home because of a wildfire or other natural disaster. The coverage will pay for living elsewhere while your home is repaired or rebuilt. But it can vary by state and policy, so it’s best to familiarize yourself with your policy’s limits and coverage.

Fire mitigation. In some areas at high risk for fire, insurers are asking homeowners to spend their own money on fire mitigation, such as by thinning trees located close to their homes. Some homeowners who balk at this request may find it difficult to secure affordable insurance, Walker noted.

Overall, Walker said, homeowners and renters should familiarize themselves with the basics of insurance. “The homeowners policy is pretty comprehensive,” she said. “It’s a legal contract, and know what your contract says.”