Most homeowners and business owners in California have unfortunately been impacted by wildfires in recent years. Such events can be life altering; causing families to evacuate homes and businesses to pause operation. Most conversations focus on how to use your existing insurance if you’re in an evacuation area or suffer a loss due to the fire. Today, we’ll focus on key elements buyers will want to know when purchasing a property anytime before Thanksgiving.

What is Fire Season?

"Fire season" in California refers to the period of the year when wildfires are most likely to occur due to dry conditions, high temperatures, low humidity, and strong winds. Traditionally, fire season in California was considered to run from June to October. Due to dryer years and changing weather patterns, however, fire season has effectively expanded to cover much of the year, with peak fire activity often occurring between August and November. The good news is that fire season doesn’t seem to have much of an impact on insurance, unless an area is currently experiencing an active wildfire.

Do People Really by Homes During an Active Wildfire?

Yes. Quite often actually. Purchasing a home that’s currently threatened by a wildfire isn’t as crazy as it may seem. Often clients enter escrow long before the fire starts or after a significant portion of the fire is contained.

Sometimes insurance carriers consider a property to be “near” an active wildfire when it may not really feel like it on the ground. For example, the Lake Fire in July 2024 was in Santa Barbara County in the Santa Ynez Valley. Mostly a vegetation fire, it was quite far from Santa Barbara and Montecito. Because Montecito is also technically in Santa Barbara County, however, some insurance companies refused to issue new insurance policies in Montecito until the Lake Fire was 100% contained. By insurance standards, these homes were “near an active wildfire,” however, many locals would have disagreed.

How Do Insurance Options Change during an Active Wildfire?

When a wildfire is active, insurance companies often impose what’s called a “bind restriction.” This is a temporary pause on issuing new insurance policies or making changes to existing ones. Each insurance company has its own metrics to determine when to issue or lift a bind restriction so it can be very beneficial to work with a local broker who can help navigate these nuances. For example, some insurance companies require that a fire be 100% contained before new policies can be started while others require only 75% containment. Additionally, some carriers require that a property be at least 50 miles from an active wildfire while others only require a 25-mile buffer.  

What are my Options if the Property I want to buy is near an Active Wildfire?

1. Delay Closing — If a client has the flexibility to do so, it’s usually best to push closing back until the wildfire has passed. This allows all parties to feel confident with the new property.

2. Start a Temporary Policy — Since pushing back a close date isn’t always an option in a competitive real estate market, some buyers might choose to go with a less desirable temporary policy. Doing so can allow all parties to close on time and have insurance in place until the fire is contained. Often this means that a buyer might need to start with a more expensive and less comprehensive insurance policy just to close. This usually involves the California FAIR Plan which can be cancelled at any point for a pro-rated refund once the client switches to the preferred policy after the fire has passed. Something to keep in mind though is that some carrier might raise rates after a fire so the initial quote and price a buyer approved for an insurance policy before the fire occurred may not be available after the fire is contained.

3. Finalize Insurance ASAP — In some instances, buyers might choose to buy an insurance policy for a later start date if they’re able to do so. We saw this with the Thomas Fire, for example, which started in Ojai and made it’s way to Montecito + Santa Barbara over a few days. Initially, only properties in Ojai and Ventura were limited by a bind restriction. To avoid a bind restriction, some clients in Montecito and Santa Barbara chose to lock in insurance immediately while scheduling it to start at the close date. This can often work well if the insurance company is one that offers a full refund for a policy if it falls out of escrow or needs to be cancelled. One consideration with this approach though is that the insurance start date can’t later be changed if the close date changes.  

As you navigate buying a property in California during fire season, staying informed and adaptable is key. The unpredictable nature of wildfires and their impact on insurance availability mean that buyers must be prepared to explore multiple options, whether it’s delaying the close, opting for temporary coverage, or securing a policy in advance. Working closely with a local insurance broker can help you find the best strategy for your unique situation while making sure you have the coverage you need, when you need it.