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Last Updated 5/17/19

Wildfires continue to be a significant risk for property owners across the United States, with millions of properties at high or very high risk and total annual damage often exceeding a billion dollars. The frequency, size, and intensity of wildfires vary significantly by year, but many of the worst years for wildfires have been in the past decade. Acres burned, one way of measuring a wildfire season’s ferocity, only surpassed 9 million twice between 1960 and 2010. Since then, acres burned surpassed 9 million in 2012, 2015, and 2017. Many factors are involved in creating conditions that are primed for severe wildfires, such as climate and weather variability.

According to the National Interagency Fire Center (NIFC), the 2017 fire season was near normal for number of acres burned, along with the number of reported wildfires. Between January 1 and December 30, 2017 there were 71,499 wildfires in the US, which burned 10,026,086 acres. According to a recent study, 2017 to early 2018 wildfires, heat waves and droughts in the US produced $12.33 billion in insured losses. Although 2016 was a regression to the mean in terms of acres burned and insured losses, the first quarter of 2017 proved an active one for wildfire activity with around 2.2 million acres burned.

While some estimates indicate nearly 90 percent of wildfires are caused by human activity, there is much evidence to indicate that severity of wildfires in recent years may be linked to changing climate and weather variability. Climatic changes are likely influencing recent wildfire trends. Wildfire seasons are starting earlier, due to warmer spring temperatures and earlier snow melt, and they are lasting longer into the fall. Years with warmer spring temperatures and reduced spring snowpack tend to be the years with the most wildfires. Additionally human development near traditionally fire-prone ecosystems has contributed to significant losses due to wildfires.

While all 50 states have incurred wildfire damage at some point in the past 10 years, wildfires are most common in the Central and Western states, where dry conditions, strong winds and extreme heat fuels fire and increases the number of acres burned. Wildfires can also be man-made. While some wildfires occur naturally without human intervention, such as those attributable to lightning strike, wildfires are often caused by humans either intentionally or unintentionally. These fires mostly occur during the summer months when the weather is hot, dry and windy. Man-made fires are often caught earlier and, therefore, losses are not as high as natural fires. This is most likely due to the fact man-made fires are started closer to habitable areas and are, therefore, detected much earlier. 

The number of communities being built in natural wildland areas, known as wildland-urban interface (WUI), could be also be contributing to the rise in extreme wildfires. More people are moving into the WUI to take advantage of the privacy, natural beauty and affordable living. The population shift has brought in new fire threats; as additional neighborhoods are built in rural areas, the potential for incurred losses has grown.

Wildfire Mitigation:
The Community Wildfire Protection Plan (CWPP) is a collaborative plan created by fire departments, state and local forestry staff, land managers, community leaders and the public in an area at-risk from wildland fire. The CWPP assesses a given community’s wildfire risk and outlines ways to reduce or mitigate that risk. One risk-mitigation technique is land management. Land-management techniques can be put to use by foresters, land managers and homeowners to create and maintain defensible areas around homes and businesses. 

Moreover, protecting property from wildfire damage requires preventative action well before the flames start. Property insurance policies typically provide protection against losses due to wildfires. ISO Homeowners 3 Special Form (HO-3) provides coverage for a house and its contents. There are several applicable coverages under HO-3 in case of wildfire damage or even loss of use due to forced evacuation. Coverage A provides coverage for a house and its contents, as well as any structures attached to the premises, such as a garage or deck. Coverage B covers detached structures, such as fences, sheds or barns, but excludes any structure for which rental income is collected or that is used for business purposes. Personal property is covered under Coverage C and includes not only property on the premises but also owned and stored elsewhere. Property loaned to a neighbor and destroyed in a fire would be covered under the neighbor’s policy. Coverage D covers loss of use, including rental and living expenses if the insured must vacate the premises due to unsafe living conditions, as well as lost rental income for any income producing portion of the property. Coverage D also includes loss of use, even if the property is not damaged, in cases where civil authorities have prohibited the property owner from remaining in the residence. In case of loss of use due to civil authority, living expenses are covered for a maximum of two weeks.

The NAIC and the Catastrophe Insurance Working Group of the Property and Casuality Insurance Committee are increasing efforts to tackle the effects and solutions of natural catastrophes such as wildfires. Additionally, NAIC members have taken an active role in educating Congress and providing technical feedback on various proposals regarding natural catastrophes. Effectively managing a natural disaster response such as a wildfire, is one of the main issues regularly discussed between NAIC members and members of Congress.

As wildfire risk continues to increase, all stakeholders-including federal, state and local governments; insurance regulators; fire protection agencies; insurers; and homeowners-should work in tandem to create solutions to remove any obstacles to the implementation of sound risk management. In light of these unexpected catastrophes, the NAIC has provided a link from Insure U that can help consumers determine the best course of action before, during, and after a wildfire strikes. Disaster Prep Guides are available at Consumers interested in insurance information specific to where they live should contact their state insurance commissioner.

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