Wildfires and Climate Change Are Making It Harder to Find Home Insurance

Homeowners in parts of California, Colorado, and Texas have a higher risk of wildfires than many homeowners in other parts of the country.

That higher risk is making it increasingly difficult to find home insurance.

Today, many of America’s top insurers avoid insuring certain homes with high wildfire risk. Insurers calculate the risk of covering a home in a wildfire-prone area. If that risk is too high, then the insurer will cancel the policy or decline to cover the policyholder.

New Colorado Homeowners Unable to Buy Insurance Due to Wildfire Risk

In one recent case, a homeowner in Colorado was unable to purchase insurance from Allstate due to the wildfire risk of his home.

That man, a transplant from California, moved to Colorado and purchased a home. He bought homeowners insurance from Allstate, and assumed he was covered.

However, Allstate visited the home and cancelled his policy soon after. An Allstate adjuster determined the property was too high-risk to insure: it was too likely to be destroyed by a wildfire. Based on that risk, Allstate decided to cancel the policy.

It’s becoming an increasingly familiar story throughout the country. If you live in a wildfire-prone area, you may struggle to buy homeowners insurance.

15% of Homes in Colorado Town Unable to Obtain Insurance

In another notable case, 15% of residents of a Colorado town are unable to obtain homeowners insurance due to wildfire risk.

10% to 15% of homes in Pagosa Springs, Colorado are in State Farm’s third wildfire risk category, which means they’re too risky to insure. Homeowners who try to purchase homeowners insurance in these areas will be unable to do so.

State Farm is America’s largest home insurance company. They insure more homeowners than any other company.

Hundreds more homes in Pagosa Springs are in State Farm’s second wildfire risk category, which means they’re high-risk. These homeowners can buy insurance with State Farm, but it’s more expensive.

As climate change increases the severity and frequency of wildfires, these problems are expected to get worse, making it increasingly difficult for homeowners to buy the insurance they need.