October 10, 2013

Property damage from wildfires is estimated to cost $41 billion for the 268,000 homes that fall under the “Very High Risk” category in the 2013 Wildfire Hazard Risk Report by CoreLogic, a provider of consumer, financial and property information, analytics and services.

The Consumerization Of Risk Management

Due to the outbreak of wildfires in the western region over the past year, the report examines the potential risk in 13 western states. More than 1 million residential properties are located in the high or very high wildfire-risk categories, with total value of about $189 billion, according to the report.

“Recent trends have proven that the risk of a wildfire damage is a real and immediate threat to many homeowners in the western U.S.,” says Dr. Thomas Jeffery, senior hazard scientist for CoreLogic Spatial Solutions.

Jeffery adds, “the next two months could be a critical time should fires continue to ravage the dry fuel areas in the west, as ongoing drought conditions in the region continue to exacerbate wildfire risk.”

According to the report, Southern Rockies and South Central U.S. contain the most homes facing wildfire risk. States most commonly associated with wildfire risk include Colorado, California, and Texas, with combined property exposed to risk estimated at about $160 billion. Texas takes the top spot with a total of 678,544 homes in the high-risk range.

Seven metropolitan areas were also examined and identified as high-risk properties. Los Angeles, contains 9,110 properties identified as very high risk. About 16,000 properties were identified in San Diego, estimated at $2.7 billion. Boulder, Colo., has about 9,000 homes at the highest level of risk, estimated at $1.7 billion.

“Just because your home is located within a city boundary does not necessarily mean you are safe from wildfire destruction if there is wildland vegetation nearby,” comments Jeffery. “Wind-blown embers can travel hundreds or even thousands of feet and ignite homes located far away from an actual fire.”

Properties were assigned a numeric risk, ranging from 1 to 100. Properties were also measured according location as well as the physical property. About 1.5 million homes were assigned the highest risk value, with a total value at risk estimated around $224 billion.

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Zarna Patel is a staff writer for InformationWeek's Financial Services brands, which include Bank Systems & Technology, Insurance & Technology and Wall Street & Technology. She received ...