Dangerously dry conditions across Arizona and the Southwest are leading to another devastating wildfire season. Many homes and businesses have been, or will be, affected by these tragic events. Homeowners insurance policies usually provide coverage for physical damage to the property as a result of wildfire. Some cover damage from smoke, soot, ash, and the slurry that may form when they are mixed with water used to battle the flames. They also may provide for reasonable living expenses if an evacuation is necessary. Some may provide emergency advance payments which apply to your final claim settlement. However, the scope and overall coverage can vary widely among insurance policies.

All insurance policies include some exclusions to coverage. Additionally, some insurance companies use complex policy language and exclusions to deny claims or full coverage. For example, there may be only limited coverage for trees and plants damaged by fire, or there is likely a business activities exclusion in your homeowners policy. If your home or business is located in an area prone to wildfire, it would be wise to examine your insurance to make sure you have adequate coverage.

Insurers often offer settlement amounts based on specific policy terms, which may not always result in payment of replacement costs. Sometimes insurers will make initial payments that are less than replacement costs, and only pay the full costs after receipts are produced for replacement. Many responsible homeowners are shocked when offered a settlement that amounts to only a fraction of the actual replacement costs. They may feel pressured to accept such offers because it can be difficult to finance a full rebuild and replacement of possessions themselves, then wait for the insurance company to pay the full value of the policy. Many property owners in high-risk areas end up paying much higher premium rates as well, which adds to their frustration when denied full coverage after their loss.

If you want to be fully prepared in the event that you are faced with a fire disaster, you should know which losses would be covered and which losses would be excluded under your insurance policy. Always read your policy carefully, and if you have questions or find yourself in a dispute with your insurer, consult with an unbiased professional.