Does Homeowners Insurance Cover Wildfires?
The insurance industry is built on assessing and managing risk. As extreme weather events increase, insurance rates will increase with them.
Photo credit: iStock
Mobilizing Alberta is an initiative aimed at increasing engagement on climate change across Southern Alberta. Through Climate Action Grants, a Climate Conversation Speaker Series, and the Preparing Albertans for Climate Change e-course, Mobilizing Alberta provides a foundation on which Albertans can build awareness and support meaningful climate action. Over the next few months, we’ll share a series of informative blog posts to answer frequently asked questions, clear up common misconceptions, and break down climate solutions in a straightforward, easy-to-understand way.
In this post, we’re exploring the topic of homeowners insurance and wildfire damage.
Yes, wildfire damage is covered by homeowners insurance. But it’s important to understand the implications that a changing climate is having (and will continue to have) on the industry.
What is homeowners insurance, and what does it cover?
A homeowners insurance policy helps protect your home, home furnishings, and other belongings in case of damage, theft, or other types of loss. Your policy might also cover additional living expenses if you’re displaced from your home and have to live somewhere else temporarily.
Your homeowners insurance coverage is the maximum amount your insurance company would pay if you make a claim. This usually includes personal property (which protects you from loss or damage to your home and personal possessions as well as some vehicles) and liability (which protects you in case of injury to other people or damage to the property of others). The premiums you pay vary depending on the amount and type of coverage you choose.
Is wildfire damage covered?
Most homeowners insurance policies cover fire, including wildfire. They may also include coverage to help with the cost of accommodations and living expenses if you have to leave your home because of evacuation or damage.
If you already have homeowners insurance, a wildfire or the increased risk of one in your area won’t change your coverage, but it may affect your ability to get a new policy or make changes to an existing policy. When wildfire events or other disasters occur, insurance companies may restrict sales of new policies in areas under threat, or limit your ability to adjust your coverage. Your best defense is to make sure you have year-round coverage, so if there’s a major event you don’t have to worry about trying to purchase insurance.
In Canada, there is no such thing as an “act of God” exclusion. Insurance companies regularly cover losses and damages from wildfires, storms, and floods.
The role of climate change
Experts agree that climate change is a factor in the increased frequency and intensity of wildfires. Climate change brings with it increased temperatures, dry conditions, and other extreme weather that can make wildfires more likely and more intense. In Canada, wildfire activity has increased over the last several decades; in 2023, the area burned was more than six times the historical average.
And Canada is not alone — across the globe, wildfire frequency has increased. One study estimates that between 2001 and 2024, the area burned increased by 5.4% each year.
How is Alberta impacted by wildfires?
Alberta has a history of significant and devastating fires, even before the destructive fires in Slave Lake (2011) and Fort McMurray (2015). But in recent years, the province has seen them grow in intensity and area, accounting for some of the largest losses in Canadian history. In 2023, wildfires burned 6.6% of the province’s forest area, disturbing as much forest as the 11 previous fire years combined. The Jasper wildfire in 2024 caused $1.23 billion in insured losses, and the 2016 Fort McMurray wildfire cost an estimated $9 billion in total.
The costs to insurance companies are staggering, but the property losses and disruptions to human life are equally significant. The Jasper fire damaged over one-third of the town and forced the evacuation of 25,000 people. Owners of hotels, restaurants, tour companies, and other businesses in the hospitality industry have lost buildings, inventory, and business. In Fort McMurray, over 90,000 people were evacuated and 2,400 buildings (including homes, businesses, and other structures) were destroyed.
How are insurers responding to climate change?
The insurance industry calls climate risk one of the “key financial system risks” and warns that in order to protect Canadians from the effects, the insurance industry must innovate. But the Insurance Bureau of Canada also advocates for climate action, including “policy changes and financial investments that will help protect Canadians from the immediate and emerging effects of our changing climate.” In April 2025 former CEO and current board member of Allianz SE, one of the world’s largest insurance companies, warned that the cost of extreme weather events brought about by climate change could leave the financial sector “unable to operate.” Gunther Thallinger urged the financial sector to take definitive action to mitigate climate change and “put sustainability goals on the same level as financial goals.”
How does climate change affect insurance rates and coverage?
The insurance industry is built on assessing and managing risk. As extreme weather events increase, insurance rates will increase with them. A recent survey suggests that up to 73% of Canadians are worried that climate change will drive up their insurance premiums, and they are not wrong.
According to the Insurance Bureau of Canada, 2024 was the most expensive year on record for insurance payouts; insurance companies paid out $8.5 billion to cover losses across the country. As a result, rates increased by 5.28% in 2025. Premiums in Alberta increased the most of any province or territory, with increases of 9.07% after a series of disasters, including a hailstorm and the Jasper wildfire, caused $4.1 billion in damages in the province.
Experts worry that in areas seen as prone to catastrophic weather events (such as Florida and California), insurance companies will withdraw coverage because the cost to their businesses will be too high. In uninsured regions, financial services from mortgages to investments would no longer be viable — leading to economic devastation.
Canadians are concerned about the impacts of climate change on their insurance premiums.
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What should you know if you’re impacted by wildfires?
Having your property damaged or destroyed by extreme weather events is traumatic. Unfortunately, it’s something that more and more people will face as climate change increases the frequency of wildfires, hailstorms, and floods. There are some things you can do make sure you’re prepared in case it does happen to you:
- Keep a record of your valuables and other possessions. This is a good way to be prepared for any kind of loss or damage. Store this information on a cloud drive, such as iCloud, Google, or Dropbox, so you can access it whenever you need it. Take photos, scan receipts, or save copies of online purchases. Keep a file with serial numbers. That way, you’ll have everything ready to go if you do need to file a claim.
- Make your claim as soon as possible. You have two years from the date you become aware of a damage or loss to file a claim with your insurance company. Making the claim early gets the reimbursement process going as soon as possible.
- Understand your policy. Typically, your policy covers damages up to a limit specified in the policy. If your policy covers the replacement cost, the insurer pays whatever it costs to replace your property, even if it exceeds coverage limits. Your policy does not insure the value of the land. It only insures the structures and your belongings that were on the land.
- Most policies have a “same site” clause for guaranteed replacement, which means you must rebuild the home on the same site it occupied before the loss.
- You can choose who repairs or rebuilds your home. Many insurance companies have lists of recommended service providers whose work they guarantee, but you don’t have to choose from that list.
For more detailed information about what’s covered if you’re affected by wildfires, check out the Insurance Board of Canada’s fact sheet.
The insurance industry has been called a “bellwether” for climate change. Because their business is based on risk, the industry has been one of the first to raise the alarm and push for climate action. But everyday Albertans can take individual action, too.
Preparing Albertans for Climate Change
The University of Calgary’s e-course, Preparing Albertans for Climate Change, offers a clear, actionable look at how we can adapt to and reduce the impacts of climate change.