Committees Active on This Topic

Additional Resources

Contacts

Media queries should be directed to the NAIC Communications Division at 816-783-8909 or news@naic.org

Jennifer Gardner
Manager
Phone: 816.783.8758
Fax: 816.460-7539

NAIC Center for Insurance Policy and Research (CIPR)

CIPR Homepage

Wildfires

Last Updated 6/5/17

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. Many of the worst years for wildfires have been in the past decade. Acres burned, one way of measuring a wildfire season’s ferocity, has only surpassed 9 million four times since 1960: in 2006, 2007, 2012 and 2015. Many factors are involved in creating conditions that are primed for severe wildfires, such as climate and weather variability.

Overview
According to the National Interagency Fire Center (NIFC), the 2015 fire season set a new record for the number of acres burned in the United States. Between January 1 and December 30, 2015 there were 68,151 wildfires in the US, which burned 10,124,149 acres. According to a Munich Re study, in 2015 wildfires, heat waves and droughts in the US produced $1.9 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.