Wildfire Insurance in Canada: What to Know

Wildfires in Canada are becoming increasingly destructive, with the 2025 season already surpassing historical averages. Over 1,800 fires have burned more than 2.8 million hectares, forcing 32,000 evacuations. Rising wildfire risks are driving up insurance premiums, especially in high-risk areas, and some insurers are limiting coverage or withdrawing from certain regions. Here's what you need to know:

• Wildfire coverage: Most home insurance policies in Canada include wildfire damage, covering repairs, personal belongings, and evacuation expenses.
• Costs: Premiums are influenced by location, property condition, and wildfire risk. High-risk areas face higher premiums and stricter terms.
• Coverage types: Choose between Replacement Cost Value (RCV) for full replacement or Actual Cash Value (ACV), which accounts for depreciation.
• Exclusions: Common exclusions include maintenance-related damage, smoke odours without physical damage, and intentional acts.
• Risk reduction: Fire-resistant materials, vegetation management, and regular maintenance can protect your home and potentially lower premiums.

With premiums expected to rise through 2026, securing the right coverage and taking proactive steps to reduce risks are essential for protecting your property and finances.

The Insurance Bureau of Canada on Wildfires, Evacuations, & What's Covered

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How Wildfire Insurance Coverage Works

Understanding your wildfire insurance coverage can make all the difference when recovering from a disaster. In Canada, most home insurance policies include wildfire damage protection without exceptions.

What Wildfire Coverage Includes

In Canada, wildfire insurance works on a simple premise: if a fire damages your property, you're covered. As Taras Trofimov, an insurance-focused content writer, explains:

"Typical fire insurance coverage in Canada encompasses all types of fires – including those caused by natural disasters. There are no 'acts of God' in Canadian home insurance, meaning that you will be protected from fire without exceptions – unless damage is self-inflicted." [4]

Standard policies cover the cost to repair or rebuild your home. They also include coverage for personal belongings such as furniture, appliances, electronics, and clothing. To make claims easier, keep a detailed inventory of your possessions.

Another crucial part of wildfire insurance is coverage for additional living expenses. The Insurance Bureau of Canada highlights:

"All standard homeowner's and tenant's insurance policies cover damage caused by fire. They also include mass evacuation coverages to help with the cost of alternative accommodations and living expenses for people who are prohibited from returning home due to a mandatory evacuation order or because their home is unlivable as a result of insured damage." [2]

This means if you're forced to evacuate, your policy can help cover expenses like hotel stays, meals, and other necessities. Be sure to keep receipts to support your claims for these additional costs.

Replacement Cost vs. Actual Cash Value

The type of coverage you select - Replacement Cost Value (RCV) or Actual Cash Value (ACV) - determines how much you'll receive after a wildfire claim.

• Replacement Cost Value (RCV): This covers the cost of replacing lost or damaged items with new ones, without factoring in depreciation [6][7]. For example, if your 10-year-old TV originally cost $500 and a comparable new one now costs $800, RCV would cover the $800.
• Actual Cash Value (ACV): This takes depreciation into account, paying only the current value of the damaged items [5]. Using the same example, you might receive just $80 for your 10-year-old TV.

RCV policies often involve a two-step payment process. Initially, you'll get the ACV for your damaged items. Once you provide receipts showing you've replaced them, you'll receive the balance to cover the full replacement cost. However, if you don’t replace the items, you forfeit the additional payment.

While RCV policies come with higher premiums, they offer more comprehensive protection. This is particularly important given that severe weather in Canada caused $3.1 billion in insured damages in 2023 alone [4].

Coverage Differences by Province

Though wildfire coverage is generally consistent across Canada, there are some provincial variations, especially during active fire seasons.

For instance, Alberta experienced significant disasters like hailstorms and the Jasper wildfire, which led to $4.1 billion in damages and a 9.07% spike in premiums [8]. During major wildfire events, insurers may temporarily restrict new policy sales, changes to deductibles, or adjustments to coverage amounts. However, existing policy renewals typically remain unaffected [2].

Rural and remote properties often face higher premiums due to limited access to public fire protection services [2]. Some policies include a "Declaration of Emergency Endorsement", which extends your policy’s expiration date during government-declared emergencies, ensuring uninterrupted coverage during wildfires.

If you live in a high-risk area, it’s wise to compare policies from multiple insurers. Restrictions can vary significantly, and what one company limits, another might still provide. While provincial disaster assistance programs can offer support, eligibility may be limited if wildfire damage is deemed insurable and you opted not to purchase coverage [9]. Knowing your province’s specific insurance landscape is key to making informed decisions.

Next, let’s explore how premiums, exclusions, and coverage limits shape your wildfire insurance options.

Costs, Exclusions, and Coverage Limits

Understanding wildfire insurance costs, exclusions, and limits is key to making informed decisions about protecting your home.

How Premiums Are Calculated

Wildfire insurance premiums are determined by a variety of factors. As Western Financial Group explains:

"When insurance companies set your premiums, they consider all the factors that determine whether you're likely to make a claim." [10]

Location plays a big role. Homes located far from fire services often face higher premiums [12]. Similarly, areas with frequent wildfire claims tend to see increased rates [10].

The condition and features of your property also affect costs. For instance, newer homes are usually cheaper to insure than older ones. On the other hand, properties in floodplains or other high-risk zones might come with steeper premiums [10].

Efforts to reduce risk can help lower your costs. Upgrading your heating system, improving plumbing, or installing security systems are just a few examples of home improvements that may lead to discounts [10].

Broader factors, such as climate change and natural disasters, are also pushing premiums higher across Canada. In 2023 alone, severe weather caused $3.1 billion in insured damage [4]. Insurers are adjusting their rates to reflect these growing risks [11].

Next, it’s important to understand the exclusions and limits that might affect your coverage.

What's Not Covered and Coverage Caps

While wildfire insurance in Canada is generally comprehensive, there are important exclusions and limits to be aware of.

Common exclusions include damage considered a maintenance issue, such as gradual smoke damage. Other exclusions may involve damage caused by nearby agricultural or industrial operations, intentional acts, or pollution-related events [13]. Even smoke odours, if no physical damage is present, are typically not covered [13].

Coverage caps often apply to detached structures like sheds, garages, and similar outbuildings. These structures usually have lower coverage limits compared to the main dwelling. It’s worth reviewing these sublimits to ensure they align with current replacement costs [12].

Timing restrictions can also come into play. Some insurers temporarily pause issuing new policies in high-risk zones during wildfire season or when wildfires are imminent [12].

Being aware of these limitations is crucial, especially if you live in an area prone to wildfires.

Getting Coverage in High-Risk Areas

Securing wildfire insurance in high-risk areas can be challenging, as seen during the 2024 Jasper wildfire, which caused over $1.1 billion in damages [12].

Canadian insurers continue to offer coverage in these regions, but premiums are often higher, especially for homes located far from fire services. Additionally, coverage may be more limited [12].

Some insurers may require homeowners to implement fire safety measures - like clearing dry brush, trimming trees, or installing fire-resistant roofing - before granting full coverage [12].

It’s worth shopping around to compare quotes and policy options, as insurers assess risks differently [12]. Taking proactive steps to reduce fire risks can not only help protect your home but may also qualify you for discounts. Be sure to document any improvements and notify your insurer [12].

The Insurance Bureau of Canada stresses the importance of maintaining year-round coverage:

"The purpose of insurance is to protect you from unforeseen events. It is important to have coverage year-round, and not wait for events to occur before trying to secure insurance protection for your home and property." [2]

This is particularly critical in high-risk areas, where waiting until wildfire season could leave you without the protection you need.

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Protecting Your Home and Choosing the Right Policy

With the growing threat of wildfires, it’s more important than ever to take steps to safeguard your home and ensure your insurance coverage meets your needs. Protecting your property and financial security starts with understanding wildfire risks and making informed choices.

How to Reduce Wildfire Risk

Creating a fire-resistant home requires careful planning and regular upkeep. The Institute for Catastrophic Loss Reduction (ICLR) suggests a tiered approach to wildfire risk reduction, recognizing that time and budget can be limiting factors for many homeowners [14].

Structural improvements to consider:

• Opt for a Class-A fire-rated roof made from materials like asphalt, metal, clay, or composite rubber tiles. Avoid wood shakes and shingles [14].
• Use fire-resistant materials such as fibre cement, brick, or stucco for siding instead of untreated wood or vinyl [14][16].
• Install tempered, double-pane windows and cover eaves and vents with 3-millimetre screening to keep sparks out [14][16].

Defensible space around your home:

• Maintain a non-combustible buffer zone around your home, deck, and other structures [14].
• Plant a moist lawn and use low-density, fire-resistant vegetation or deciduous trees. Avoid highly flammable plants like cedar, juniper, pine, or spruce [14][16].
• Use gravel beds or crushed stone for landscaping and ensure tree branches and grasses are at least 10 metres away from your home [16].

Regular maintenance tips:

• Clear your property of leaves, needles, hanging branches, and debris, especially from gutters and roofs [15].
• Store firewood and flammable plants at least 9 metres from your home. Keep a 3-metre clearance around propane tanks and barbecue areas [15].

In Canada, the financial toll of wildfires has increased dramatically. Average annual insured catastrophic losses rose from $84 million (2003–2014) to $706 million over the past decade [14]. These numbers highlight the importance of being prepared.

Reviewing and Updating Your Policy

Reviewing your home insurance policy annually is key to ensuring it reflects your current property value and wildfire risk. If you’ve made significant upgrades or changes to your home, it’s essential to reassess your coverage to avoid being underinsured [12].

What to check in your policy:

• Confirm coverage limits match rebuilding costs, not market value.
• Ensure you have replacement cost coverage instead of actual cash value.
• Document fire-resistant upgrades, as they might help reduce your premiums [12].

Keep an updated home inventory, including photos and videos of your belongings. Store this information off-site or in the cloud to simplify claims in case of damage [12][17]. If you live in a high-risk area, consider additional endorsements to cover smoke damage, debris removal, or increased rebuilding costs [17].

Once your policy aligns with your needs, compare providers to find the best options for coverage and price.

Comparing Policies and Providers

Insurance companies evaluate wildfire risks differently, so shopping around is essential. Don’t just focus on price - look at coverage limits, exclusions, and customer reviews to make an informed decision [12].

Key factors to consider:

• Claims handling and customer service.
• Financial stability of the insurer.
• Experience in dealing with wildfire claims.

J.D. Power ranks home insurance companies based on customer experience, including pricing, policy options, billing, and claims handling [18]. Bundling multiple policies, like home and auto insurance, can also lead to discounts. Be sure to carefully review policy details, as some providers include wildfire protection in their standard plans, while others may require additional riders [3][17].

If comprehensive coverage isn’t available, some insurers offer fire-only policies. These are usually less expensive but provide limited protection compared to full home insurance plans [3].

For Canadians researching insurance options, resources like Wealth Awesome offer side-by-side comparisons to help evaluate coverage and costs across providers.

Get multiple quotes to ensure you’re making the right choice. Western Financial Group highlights the importance of personalized service:

"As an insurance broker, Western Financial Group compares insurance options from trusted providers across Canada and takes your specific situation into account to make sure you get exactly the coverage you need at the right price – no surprises!" [17]

Nadja Dreff, Head of Canadian Insurance at Morningstar DBRS, notes that increasing weather-related losses are likely to continue driving up property insurance costs in the near future [19]. This makes balancing coverage and affordability a top priority for Canadian homeowners.

Key Points About Wildfire Insurance in Canada

Wildfire insurance in Canada generally covers damage caused by fires, including wildfires. In most cases, standard home and tenant insurance policies also provide coverage for mass evacuations, which can help with temporary accommodations and living expenses during emergencies [2].

The scale of this wildfire season has highlighted the importance of having adequate insurance coverage [1]. Rising payouts and increasing premiums reflect the growing risks associated with wildfires [8]. A recent survey revealed that 73% of Canadians are concerned that climate change will lead to higher insurance costs [8].

The insurance market in Canada is already showing signs of tightening, particularly for properties located near wildland–urban interfaces. Some insurers are introducing exclusionary clauses or stricter underwriting practices for high-risk areas [1].

These changes in the market call for proactive measures. Marcos Alvarez, Managing Director at Morningstar DBRS, shared his perspective:

"The recurrence of major wildfire seasons, particularly in regions previously considered low risk, is raising broader questions around insurability and the protection gap. Canada has so far avoided the extreme pricing or coverage dislocation seen in California, where property insurers have withdrawn or limited their offering in the midst of high losses and regulatory price constraints." [20]

To stay prepared, consider these key steps:

• Act early: During major weather events, insurers may temporarily limit new policies or policy changes, so it's crucial to secure coverage before emergencies occur [2].
• Shop around: Coverage restrictions and terms can vary between insurers, so comparing options is essential [2].
• Add conditions when buying a home: Include a "subject to property insurance" clause in your offer to ensure coverage is available for the property.
• Keep detailed records: Maintain an inventory of your belongings and ensure you fully understand your policy's coverage limits and deductible [2].

With premiums expected to continue rising through 2025 and 2026, particularly in wildfire-prone areas, taking action now can help protect your home and manage costs [1].

FAQs

What steps can homeowners in wildfire-prone areas take to lower their insurance premiums?

Homeowners living in areas prone to wildfires can potentially lower their insurance premiums by taking steps to reduce fire risks. One of the first things you can do is schedule a FireSmart™ home assessment. This evaluation will pinpoint weak spots around your property and provide recommendations to improve safety.

Creating a defensible space is another key measure. Clear out dry vegetation, dead branches, and any other flammable materials within at least 10 metres of your home. This buffer zone can significantly reduce the chances of a wildfire spreading to your property.

Upgrading to fire-resistant materials is also a smart move. Consider installing metal roofing or non-combustible siding, and make sure to keep your gutters and roof free of debris. Many insurance companies offer discounts for homeowners who implement these wildfire risk reduction strategies, so it’s worth reaching out to your insurer to explore potential savings.

What’s the difference between Replacement Cost Value (RCV) and Actual Cash Value (ACV) in wildfire insurance?

Replacement Cost Value (RCV) vs. Actual Cash Value (ACV)

Replacement Cost Value (RCV) reimburses you for the full cost of repairing or replacing damaged property using materials of similar quality, without subtracting for depreciation. In simple terms, it covers what it takes to bring your property back to its original state.

Actual Cash Value (ACV) takes depreciation, age, and wear into account. Instead of covering the full replacement cost, it compensates you based on the property's current market value at the time of the loss. This amount is usually lower than what it would cost to fully replace the item.

When deciding between these two options, it's important to weigh your priorities. While RCV provides broader protection, it often comes with higher premiums compared to ACV.

How can I make sure my home is properly insured against wildfires, especially in high-risk areas?

To make sure your home is adequately insured against wildfires, the first step is to reach out to your insurance provider. Confirm whether your policy covers wildfire damage, and ask if there are any wildfire-specific deductibles or extra premiums you should be aware of.

You can also take steps to lower your risk. Upgrading parts of your home with fire-resistant materials, like metal roofing or siding, can make a big difference. Additionally, creating a defensible space around your property by clearing dry vegetation, debris, and other flammable items can help protect your home. These measures might also influence your insurance coverage or premiums, so it’s worth discussing with your provider.

For those living in high-risk areas, it’s especially important to regularly review your policy and stay updated on your coverage options to ensure they align with your needs.

Related posts

• First-Time Home Buyer Checklist for Canadians
• Can't Get Approved for a Mortgage? Here's Why
• Mortgage Rates: Fixed vs Variable Comparison
• Understanding Home Insurance Exclusions in Canada

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