Last July, I was sitting on a patio at a popular watering hole west of Missoula, Montana, with my wife, her sister, niece and her husband, when someone pointed out smoke in the distance. The smoke was the Lolo Peak fire, which destroyed 539 thousand acres and killed fire fighter Brent Witham. My relatives did not have to evacuate, but the fire came uncomfortably close to their home. The Lolo Peak fire was one of over 50 thousand wild fires that blackened the western U.S. this year.
The California wild fires in Sonoma County moved so unbelievably fast that authorities had difficulty evacuating residential areas. The fires were so large that fire crews were stretched to the breaking point, forced to focus on evacuating residents and saving what they could. In Santa Rosa, California, a catastrophic wildfire destroyed 3000 homes, 5% of the city’s housing stock, and killed 40 citizens, with others still missing. Reports put the economic cost of the Northern California fires at over $6 billion. Collectively the wildfires in the Western U.S. have burned over nine million acres this fire season. According to EPA, nine out of ten of the worst fire years in the U.S. have occurred since 2000. The fire season this year has been devastating.
Insurance cannot prevent the personal disaster caused by a wildfire, but it can help you recover. There are three areas that you should think about before disaster strikes.
All you need to do is look at the photos from Santa Rosa to realize the devastating impact of wildfires. From an insurance standpoint, wildfires are another form of fire peril, so unlike flood insurance, you typically will have protection in your standard insurance policy. The things that you should watch for include:
The insurance industry can at times be helpful and creative in the face of catastrophic exposures. Some insurance carriers now offer private fire departments to protect high valued property from wildfires. This service is only available in certain zip codes or counties, but has successfully demonstrated its positive effect. This approach resembles how fire protection was delivered 250 years ago in this country, and is seen as an augmentation of public firefighting services.
Losing your car in a wildfire is considered a “comprehensive” loss. Auto coverage is usually written on an actual cash value basis (cost new minus depreciation) rather than replacement cost. If you are leasing your vehicle or have an auto loan, the amount that you recover from a standard auto insurance policy may not be adequate to pay off the lender. You should ask your agent to ensure that your policy includes lease gap coverage to eliminate this possibility. The lack of this coverage extension could significantly your “out-of-pocket” costs in the event of a total loss.
People rarely consider that their most valuable economic asset is their ability to generate an income stream in the future. Homes can be rebuilt. New cars can be purchased. But imagine the impact of a family losing its primary wage earner. Worse yet, what if the wage earner is badly burned and will need lifelong care, requiring cash rather than generating it? Everyone’s situation is different, but you should be mindful of how your or a loved one’s death or disability will impact your family and develop a realistic plan to address it.
The difference between protecting you and your family from the impact of wildfires versus more common losses is a question of degree. Thousands of families this year lost all of their physical possessions. Hundreds lost love ones. While it’s difficult, people can recover from the loss of a home or a vehicle or even a loved one, but the cumulative effect of losing everything can be crushing. Planning ahead will not eliminate the loss, but it can make recovery easier.
For more information about protecting yourself, please contact us.
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