The devastating wildfires in Australia began in June 2019 and lasted several months. They destroyed more than a fifth of the country’s forests and claims between Nov. 8, 2019 and Jan. 17 reached $970 million in insured losses, according to the Insurance Council of Australia.

Meanwhile, California has experienced some of the worst wildfire seasons in history in recent years. What’s more, early indications suggest 2020 has the potential to be another dangerous year. February is typically one of the wettest months in California. Yet, San Francisco had no rainfall in February—it’s the first time that’s happened in 170 years.

With wildfires in the news, it’s reasonable to assume policyholders are wondering about the details of their homeowners coverage for fire damage. In these conversations, independent agents must stress the importance of effectively preparing for the risk of wildfires and connect clients to useful resources.

Here’s a closer look at some key coverage considerations and wildfire preparation tips agents should focus on during these discussions.

Provide Coverage Details—and Peace of Mind

Coverage for fire damage is typically more straightforward than other natural disasters, such as floods and earthquakes. Most policies cover fire damage, while flood and earthquake damage is excluded. Still, it’s worth spelling out a few details for concerned clients that help to shore up their coverage and provide some peace of mind.

For starters, clients need to understand that a typical homeowner’s claim usually involves partial damage to the home, such as roof damage from a heavy windstorm or a fire limited to the kitchen area. Complete destruction of a home in a wildfire’s path is a more frequent occurrence.

This is where it’s important to make sure clients recognize the difference between replacement cost and actual cash value for the structure and the contents of the home.

Encourage clients to create or update their home inventory. Agents should ask for a copy of this list and suggest clients back it up on the web. One worthwhile addition to this inventory is to film a “walking tour” of the residence, noting specific valuables. Additional coverage and limits may be required for specific valuables such as jewelry, art collections or the contents of wine cellars.

It’s also worth reviewing policy specifics like deductibles and coverage limits with an eye toward a wildfire claim to avoid any post-loss surprises.

Finally, consider talking through the extended replacement coverage option with the client and the potential for higher building costs following a wildfire. When a natural disaster such as a wildfire or hurricane causes extensive damage in an area, shortages in building materials and available contractors can drive up rebuilding costs.

Help Clients Develop an Emergency Plan

Most clients are going to begin a conversation with their insurance agent by asking about insurance-specific wildfire issues. Agents can add value to these conversations by providing additional tips and resources to help the client create an emergency response plan.

The importance of having a plan cannot be overstated. No detail is too small. Family members should set up emergency alerts on their phones and make sure they have key phone numbers memorized. They should plan for the possibility that they may be separated when the emergency hits and should agree on meeting areas and communications plans.

Agents can also suggest families create as much “defensible space” on their property as possible by eliminating brush and other combustible materials from the area around the house. They should also have an evacuation plan in place with specifics on how to get out of second- or third-story rooms, as well as the basement, in the event of a fire.

Finally, agents should direct clients to online resources such as FEMA’s Ready.gov or the Centers for Disease Control and Prevention. In many cases, there may be additional local resources or materials from brokers or carriers that agents can pass along.

These conversations are an opportunity to ensure a client has the right coverage against wildfire risks and understands the details of the policy—and with the right information and approach, they can add significant value for clients and deepen the overall relationship.

Just like wildfire prevention, it’s never too early to start preparing for these meaningful discussions and putting a plan in place.

Ann Myhr is senior director of knowledge resources, The Institutes.