The homeowner question to ask before Jan 1 if your policy can carve out wildfire coverage

Wildfire season no longer feels like a season at all, and that shift is quietly rewriting the fine print on homeowners insurance. Before the calendar flips, you need to know whether your carrier can carve wildfire out of your policy, and what your options are if they do. The stakes are not abstract: if you discover after a fire that your coverage was narrowed or excluded, the financial gap can be life changing.

The key is to treat the end of the year as a hard deadline to interrogate your policy, your state’s rules, and your backup plans. That means asking your insurer pointed questions, understanding how new laws and programs work, and deciding whether you need to move, supplement, or fight for coverage before Jan 1 locks in another year of risk on their terms instead of yours.

1. The one question to ask before Jan 1

Your first job is to get a straight answer to a deceptively simple question: can your insurer remove or limit wildfire protection from your homeowners policy when it renews after Jan 1. You are not asking whether they plan to do it, you are asking whether they are legally allowed to and whether your current contract gives them that room. In some markets, regulators still treat fire as a core peril that must be covered, while in others, companies can now file to exclude wildfire or push you into separate, narrower coverage.

The difference is stark when you compare states. In Nevada, regulators have opened the door for companies to file policies that exclude wildfire as a covered peril, a shift that is already reshaping how risk is shared and priced. By contrast, California law still blocks insurers from stripping wildfire coverage outright from standard homeowners policies, even as carriers look for workarounds and file to modify other covered perils, a tension highlighted in reporting on California’s workaround without a law change. When you ask your insurer whether wildfire can be carved out at renewal, you are really testing how your state’s rules line up with the company’s appetite for risk.

2. Why wildfire coverage is not a given anymore

Even if your declarations page still lists “fire” as a covered peril, you should not assume that means full protection from a modern megafire. Insurers are increasingly drawing technical distinctions between structure fire, wildfire, smoke, and secondary damage like mudslides, then using those distinctions to narrow what they pay. Legal advocates in California have had to remind carriers that state law protects your right to “All Loss by Fire,” including smoke damage and certain mudslides that follow a blaze, a point underscored in guidance on California Wildfire Insurance Claims.

At the same time, the sheer scale of exposure is pushing companies to test every boundary. More than 2.6 m homes in California are at moderate to high risk for wildfire damage, according to risk modeling cited in a detailed overview of wildfire insurance in California. When that many properties sit in the path of potential catastrophe, insurers look for ways to cap their exposure, whether by tightening underwriting, raising premiums, or trying to peel wildfire out of the standard package. Your job is to understand which of those levers they are pulling on your specific policy.

3. How state protections and moratoriums really work

Many homeowners take comfort in hearing that their state has a moratorium on cancellations in fire zones, but those protections are narrower and more time bound than they sound. In California, for example, “Non-Renewal or Cancellation Within Fire Perimeter” rules bar an insurer from cancelling or refusing to renew a residential policy in certain mapped areas after a declared wildfire emergency, as spelled out in a 2025 Annual Notice – Significant California Laws Pertaining to residential insurance. That is a powerful backstop if your home sits inside the official perimeter, but it does not freeze every term of your coverage forever.

Separate guidance on “How the Moratorium Works” explains that following a Governor declaration of a state of emergency, the Department of Insurance partners with CAL FIRE and other agencies to map the affected zones and trigger a mandatory one year pause on certain non-renewals, as detailed in the state’s Mandatory One Year Moratorium on Non-Renewals. Separate analysis of key California insurance laws notes that Notice 2025-01 directed all insurers to temporarily pause pending non-renewals in areas affected by the Sunset Fire and Woodley Fire, reinforcing how these tools are used in practice, as described in a discussion of key California insurance laws. The fine print matters: moratoriums can stop a non-renewal for a year, but they do not necessarily prevent an insurer from adjusting premiums or tightening terms once that window closes.

4. The carve-out risk hiding in your renewal

Even in states that still treat wildfire as a required peril, insurers are experimenting with ways to limit how much they pay when a blaze hits. Some carriers are raising deductibles specifically for wildfire losses, others are capping payouts for certain structures or contents, and a few are steering homeowners into separate fire endorsements that can be changed more easily at renewal. Consumer advocates warn that these shifts can function like a de facto carve-out, leaving you with a policy that technically covers fire but in practice leaves large gaps.

Regulators are trying to keep up. In California, for instance, officials have emphasized that fire damage is listed as a covered peril on standard homeowners policies, and they have pushed back on attempts to quietly strip wildfire protection from your policy, a point echoed in consumer guidance on California Issues 1-Year Moratorium on Insurance Cancellations in Fire Areas. Yet the Nevada example shows how quickly the landscape can change once a state allows wildfire exclusions in filings. That is why your pre–Jan 1 conversation with your insurer should drill into whether any wildfire specific sublimits, deductibles, or endorsements are changing at renewal, even if the word “fire” still appears on the front page.

5. FAIR Plans and last resort coverage are changing too

If your insurer does decide to walk away from wildfire risk, your fallback is often a last resort pool like the California FAIR Plan. Those programs are not static either. Since taking office in 2019, Commissioner Lara has made improving the FAIR Plan a priority, pushing for broader coverage options and modernized limits, as described in a state overview that asks “What do changes to the FAIR Plan mean for policyholders?” and notes that Commissioner Lara has sought a more comprehensive residential policy option alongside the current limited fire coverage, as detailed on the California FAIR Plan page.

Those reforms are starting to show up in the numbers. Earlier this year, the California FAIR Plan limit was raised to $100 M for certain commercial risks amid escalating wildfire losses, a move framed as a way to better match coverage thresholds for catastrophic wildfire losses and to help thousands of homeowners left without coverage, according to reporting on the California FAIR Plan Limit Raised to $100M Amid Wildfires. Consumer facing guidance notes that “Typical California FAIR Plan Insurance Cost” varies, with premiums depending on wildfire exposure, property size, and location, and that you should expect higher costs in high risk zones, as explained in a breakdown of Premiums and long term costs. If you are pushed into a FAIR Plan, you will likely need a separate wraparound policy to cover non fire perils, so you should factor that into any decision you make before Jan 1.

6. Discounts and safety steps that can keep coverage on the table

One of the few levers you control directly is how defensible your home looks on an underwriter’s screen. California has tried to formalize that link between mitigation and insurability through its “Safer from Wildfires” framework, which spells out specific steps like hardening roofs, clearing vegetation, and upgrading vents. The state’s FAQ notes that forming a Firewise USA community with your neighbors is another way to protect you and your neighbors and that you can view the full “Safer from Wildfires” regulation to see which improvements may qualify you for premium credits, as laid out in the Safer from Wildfires FAQ.

Regulators have also tied these safety steps to concrete insurance protections. Commissioner Lara Announces New Wildfire Safety and Insurance Protections for Californians, including implementation of AB 888, which requires insurers to recognize certain mitigation measures and offer discounts when residents reduce wildfire risk before disasters occur, and which helps more residents qualify for insurance discounts, as described in the announcement where Commissioner Lara Announces New Wildfire Safety and Insurance Protections for Californians. If your insurer is on the fence about renewing your policy, being able to document that you meet these standards can be the difference between a renewal with wildfire intact and a non-renewal notice arriving in your mailbox next spring.

7. The backup plan if your carrier walks away

Even with moratoriums and mitigation, you may still find yourself facing a non-renewal once the protected period ends. When that happens, you need a backup plan that goes beyond hoping another big brand will pick you up. In California, that often means turning to the FAIR Plan for basic fire coverage and then layering a separate “difference in conditions” policy on top to handle liability, theft, and other perils. State consumer materials explain that Commissioner Lara is seeking other improvements including a comprehensive residential policy option in addition to the current limited fire coverage, signaling that the FAIR Plan is being pushed toward a more complete solution, as noted in the section on Commissioner Lara’s efforts on the main California FAIR Plan page.

Outside of state pools, you may also need to look at specialty markets or surplus lines carriers that focus on high risk properties. That is where working with a seasoned independent agent or a certified financial planner can help you navigate the tradeoffs between cost, coverage, and company stability. Professional networks like the Certified Financial Planner Board’s directory at CFP resources can connect you with advisers who understand how to integrate insurance decisions into your broader financial plan. The key is to start that search before Jan 1, while you still have time to compare options and avoid a last minute scramble if your current carrier decides to exit.

8. The exact questions to put to your agent

When you call your agent or insurer, you will get better answers if you arrive with a script. Consumer advocates who specialize in wildfire claims suggest starting with the basics: under your current Homeowners Insurance Policy, are you covered for smoke damage, ash cleanup, and code upgrades, and do you need to document your inventory for every item to be reimbursed. Those are among the “Questions to Ask Your Insurance Company Before a Wildfire Claim” highlighted in a practical checklist on Homeowners Insurance Policy questions, and they translate directly into the carve-out risk you face if your policy is quietly narrowed.

Another resource urges you not to wait until it is too late, offering Ten questions to ask your insurance agent NOW before wildfire strikes, including “How much is my house insured for,” “How does my policy handle extended replacement cost,” and “Can I get a copy of my full policy, not just the declarations page.” That guidance, framed under the banner “Don’t wait until it is too late. Ten questions to ask your insurance agent NOW before wildfire strikes: How much is my house insured for,” appears in a homeowner education campaign at Get Wildfire Smart. Use those prompts to press your agent on whether any wildfire specific exclusions, sublimits, or endorsements will change at renewal, and insist on written confirmation of the answers before you commit to another year.

9. Reading the fine print on “fire” before you sign

Once you have asked the hard questions, you still need to read the contract that will govern your next year of risk. That means going beyond the summary page and scanning the definitions, exclusions, and endorsements that mention “fire,” “wildfire,” “smoke,” or “earth movement.” Some California homeowners policies cover wildfires, assuming that you do not live in a high risk area for these fires, but others may limit coverage or require separate endorsements, as explained in a consumer guide that notes “Some California homeowners policies cover wildfires, assuming that you don’t live in a high-risk area for these fires,” at Some California homeowners policies cover wildfires. If your policy uses vague language or cross references multiple endorsements, ask your agent to walk you through a real world wildfire scenario and show you exactly which sections would apply.

It is also worth cross checking how your policy handles the aftermath of a fire, not just the flames themselves. Guidance on California Wildfire Insurance Claims stresses that smoke damage, mudslides, and other secondary impacts can be covered under your right to “All Loss by Fire,” but only if your policy does not carve them out with narrow exclusions, as detailed in the discussion of Your Right to All Loss by Fire. As you head into Jan 1, the goal is simple: make sure that when your policy says “fire,” it still means the full spectrum of wildfire risk you actually face, not a shrinking slice that leaves you exposed when the next red flag warning arrives.

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*This article was developed with AI-powered tools and has been carefully reviewed by our editors.