Wildfires continue to be a growing threat in the Rocky Mountain Region where population is booming in high-risk areas. While many people move to and live in Colorado for its forests, mountains and views, they don’t always see the potential risks of losing their homes to wildfire – even in suburban neighborhoods. It’s critical homeowners understand the risks of living in wildfire –prone areas, the potential insurance impacts and what steps they should take to protect themselves, their property and personal finances.
Homeowners insurance typically covers property losses caused by wildfire and coverage continues to be available in most wildfire prone areas. However, with increasing risk for devastating wildfires, residents should be aware of some important factors. The cost to rebuild a house is not the same as the value of the house prior to the fire and many insurance companies require customers to share the wildfire risk by taking precautions to protect their property, requiring on-site inspections and notifying policyholders of necessary mitigation that will reduce risk to their home and keep it insurable.
Examples of additional insurance considerations:
The declarations page of your policy should identify the limit of what will be paid if you need to rebuild.
Extended replacement coverage may be available but it’s optional. Colorado law requires insurance companies to offer extended replacement coverage of at least 20% above the limit of insurance in Coverage A. It’s important to factor if the extra 20% will result in a total that is enough to cover reconstruction in your neighborhood.
Your policy could be based on “prevailing market rates” which may account for the home and the land/location, but will not account for the costs of labor and materials which seemingly rise daily.
Law and Ordinance Coverage: Covered increased costs for demolition, construction, renovation and repair associate updates in building codes and other local requirements.
The type of construction, materials, and features on your home, including the roofing, windows and siding.
Distance to a fire hydrant and a fire station, whether your neighborhood is protected by full-time and/or part-time firefighters, and any factors that affect the time it would take to extinguish a fire in your area.
Do annual policy “checkups” with your insurance professional to keep up with local building costs, home remodeling and inventories of personal belongings.
Accurate inventories of personal possessions make for faster and smoother claims’ settlements. Photos and videos offer easy ways to document your possessions. Most insurers and the National Association of Insurance Commissioners offer free home inventory apps. Colorado law requires insurance companies to cut a check for 30% of a homeowners’ total coverage, without requiring any documentation. Providing documentation can increase the return on your insurance investment.
With 2/3 of the wildfire victims in the U.S. uninsured it’s critical to contact your insurance company or agent to find out what prevention steps may be required to help reduce your wildfire risk.