Massive Wildfires Reinforce Vital Role of Insurance

Wildfires torch millions of acres each year in the U.S. Argo can provide a financial firewall for businesses in the face of increased wildfire threat.

Wildfires are becoming a year-round threat in parts of the United States, burning millions of acres, destroying homes and businesses and even claiming lives.

By early August 2018, large wildfires were burning in 14 states from Alaska to Florida, with particularly destructive fires in California. The Carr Fire, which began July 23 near Redding, California, burned 229,651 acres, destroyed more than 1,000 homes and claimed eight lives before it was fully contained more than a month later. And the Ferguson Fire near Yosemite National Park killed two people and burned almost 97,000 acres.

This year’s devastation comes less than a year after deadly wildfires in northern and southern California set records in late 2017. Wildfires in and around California’s wine country killed 44 people, destroyed thousands of structures and resulted in $9 billion in residential and commercial claimed losses in October 2017. Blamed for two deaths, the enormous Thomas Fire in December 2017 burned 281,893 acres and destroyed more than 1,000 structures.

The threat of large wildfires continues. 

Although wildfire season varies geographically, some experts say it has become essentially year-round in parts of the country, driven in part by encroaching development and a buildup of fuel.

“Not only is wildfire an annual concern, it is growing its footprint across the United States,” said Andy Hendrix, SVP of Colony Specialty – U.S. Property, noting that 2018 has seen wildfire and/or controlled burns in all 50 states, accounting for over 10 million acres burned.

Wildfire season in the U.S. usually peaks in August, when this year’s fire potential was elevated in much of the northwestern quarter of the country and high in the mountains of California, according to the National Interagency Fire Center’s Predictive Services.

Argo offers coverage where it counts.

Businesses must consider whether their wildfire risk is adequately covered. Through Colony Specialty, Argo offers primary and excess policies that include wildfire and other disaster coverage for various types of commercial properties including retail shopping centers, office buildings, hotels and habitational properties.

Hendrix recommends business owners follow the tips below to gauge whether their current policies provide enough coverage.

  • Have your property appraised regularly to be sure it is sufficiently insured in the event that you need to rebuild, replace or repair.
  • Coverage should be high enough to cover all assets in the event of loss. Include computers and other equipment, as well as inventory, furniture and records when calculating assets.
  • Make sure your policy includes coverage for business interruption (or living expenses for individuals) to cover costs while in the rebuilding phase.
  • Consider valuation coverage options such as margin clauses, agreed amount or blanket coverage to more adequately protect buildings and business personal property.

Businesses: Be proactive to minimize property risk.

Argo suggests businesses in wildfire-prone areas take these steps to reduce the threat to their property.

  • Keep property cleared of brush.
  • Cut back landscaping substantially from buildings and any structures.
  • Use fire-resistant materials for construction and landscaping.
  • Install indoor and outdoor fire sprinkler systems.
  • Make sure firefighters can access your property.

Wildfires cost billions of dollars and burn millions of acres.

  • The U.S. Forest Service spent more than $2 billion – more than half its budget – on fire suppression in fiscal year 2017, the most expensive year on record.
  • As of August 31, 43,624 fires had burned more than 6.8 million acres across the U.S. so far in 2018, according to the National Interagency Fire Center.
  • The 10-year year-to-date average (2008–2017) is 47,463 fires burning more than 5.3 million acres, according to the NIFC.

People cause the majority of wildfires.

Unattended campfires, burning debris, cigarettes, arson and other human activities far outpace the impact of lightning and lava, nature’s fire-starters. A study of 1.5 million wildfires from 1992 to 2012 found that 84 percent were caused by human activity. The findings were published in Proceedings of the National Academy of Sciences of the United States of America (PNAS).

Up Next

Coverage Insights

Fine Art Title Sleuths: ARIS Is on the Case

The underwriting team at ARIS Title Insurance Corporation dives deep into the details while researching the ownership history and provenance of fine art and high-value collectibles – a special sort of detective work.

This website uses cookies to deliver tailored content to you, collect anonymous statistics and maintain login sessions.

You may decline our use of cookies in your browser; however, certain portions of this website may not function properly. Click here for our privacy policy and information.