Environmentalists Dreamed Up a New Way to Protect Against Wildfires. Could It Work in Your Community?

As climate-driven wildfires become more common, many Americans are struggling to find homeowners insurance—and the peace of mind that comes with it. A new wildfire insurance pilot program aims to change that by linking coverage to wildfire prevention efforts, like forest management, and fire mitigation. The policy covers a homeowners association, not individual homeowners. But its creators hope insurers will adopt this model to offer more affordable disaster coverage directly to consumers.  

A New Way to Insure Against Wildfires

The wildfire resilience insurance policy, introduced in April, is the brainchild of TNC and the Center for Law, Energy, and the Environment (CLEE) at the University of California, Berkeley. Working with insurer Willis and Globe Underwriting, the policy provides $2.5 million in wildfire coverage to Tahoe Donner, a private homeowners association in Truckee, California.

The policy covers 1,345 acres of the HOA’s communal land, which includes hiking trails, campgrounds, and other recreational areas, but not dwellings. It’s a form of parametric insurance, meaning a payout is triggered by a predefined threshold or event—in this case, a certain number of acres or severity of acreage burned. 

Lower Risk, Lower Premiums

The policy’s defining characteristic is that it’s tied directly to forest management efforts. TNC—which pays the policy’s premiums—selected Tahoe Donner because the homeowners association has long practiced ecologically based forest management.

TNC found that good forest management—such as tree thinning, flammable waste removal, and prescribed burning—can reduce the damage wildfires cause to homes. As a result, these efforts may also help lower home insurance premiums.

However, “insurers currently are not accounting for forest management in insurance pricing and underwriting,” said Dave Jones, director of the Climate Risk Initiative at UC Berkeley School of Law’s CLEE and former California insurance commissioner. 

The Tahoe Donner policy—which has a 39% lower premium and 89% lower deductible than it would have without nature-based forest management—effectively shows “this can be done, as a way to persuade other insurers to do the same,” Jones said. 

Although the Tahoe Donner policy doesn’t cover individual homes, homeowners still benefit, Jones said, because the HOA’s forest management program helps lower the wildfire risk for the entire community.

Encouraging More Efforts

The aim is also to incentivize other communities to invest in climate-change mitigation efforts.

The Biden-Harris Infrastructure Investment and Jobs Act allotted $5 billion in funding to federal wildland fire management efforts through 2026. (This funding was reportedly paused under the Trump administration.) However, TNC research estimates that a minimum investment of approximately $5 billion to $6 billion per year is needed to treat the highest-priority wildfire risks through 2031. 

“The goal is to encourage more of this activity,” Jones said.

The Challenge of Wildfire Insurance

Wildfires cause severe damage across the U.S., particularly in California. This year alone, more than 2,300 wildfires have destroyed over 16,000 buildings. 

The increased frequency of fires and the resulting losses have upended the state’s homeowners insurance market. Several insurers have stopped writing policies in California, and others are severely restricting coverage in high-risk areas. 

Residents who can get private coverage are paying increasingly high premiums. Those who can’t must turn to the state-sponsored Fair Access to Insurance Requirements (FAIR) Plan, which assessed $1 billion in emergency fees on member insurers to avert insolvency from an estimated $4 billion in losses earlier this year.

“A product like this is a great step in helping solve some of the problems in California,” said Diane Delaney, executive director at the Private Risk Management Association. “It is critical that we emphasize the importance of investing in strategic risk management and encourage smarter construction and prevention.” 

TNC, for its part, hopes that, having persuaded one insurer to provide its new risk-based product, more will follow suit, including those that provide property insurance directly to homeowners. 

“We’ve had a lot of expressions of interest,” Jones said. “The next step is to do outreach to other potential customers.”

Protecting Your Property

While environmentalists, insurers, and community officials work on systemic fixes, there are steps you can take to protect your home from wildfire damage. These include:

• Building with fire-resistant materials. For instance, use tile, slate, aluminum, brick, or stone for your roof, and treat combustible materials, like wood siding or paneling, with fire-retardant chemicals.
• Creating “defensible” space. According to the Federal Emergency Management Agency (FEMA), you should keep all combustibles and flammable vegetation at least 30 feet from your home’s exterior.   
• Having a water access plan. Install sprinklers or a water tank if sources are limited, and purchase garden hoses that are long enough to reach your home and large containers.  
• Reviewing your coverage. Most homeowners insurance covers wildfire damage, but many insurers no longer offer this coverage in wildfire-prone areas. Your policy may also have sub-limits or exclusions worth identifying. For instance, some coverage only allows a certain payout for jewelry or high-value electronics.   

The Bottom Line

More wildfires and other climate-related threats are disrupting the homeowners insurance market, especially in high-risk areas where getting enough coverage is harder than ever. Environmentalists are trying to help with a new insurance model that links pricing and availability to how well a community manages its forests. Right now, it only covers one HOA in California, but its creators hope others will follow. In the meantime, homeowners can protect their property by reviewing their insurance policies and taking steps to reduce wildfire risk on their own.