3 Things to Know About Wildfire Risk and Property Claims

If the more than 400 fires that swept through Canada this year have shown us anything, it’s that areas throughout the United States are vulnerable to wildfire impacts – even if they aren’t near the blaze. This makes it critical that adjusters understand wildfire risks to policyholders nationwide, including smoke or fire damage to their homes and property items like HVAC systems.Wildfires are a threat to more policyholders, and losses from them require investigation.

Wildfires are a threat to more policyholders, and losses from them require investigation.

1. It’s Not Just a Western Problem – and the Risk Is Increasing

The fact that California had more than double the number of fires and acres burned than any other state in 2021 shouldn’t overshadow how prevalent these events are in other parts of the country. Wildfires can affect the United States coast to coast. In 2021, Texas, North Carolina, Montana, and Florida rounded out the top 5 states for most wildfires. That same year Oregon, Montana, Washington, and Arizona had the most acres burned after California. Among the characteristics that impact whether a property is susceptible to fire are nearby vegetation and fallen timber, building materials and age, and weather conditions.

A variety of characteristics make properties more vulnerable to wildfires.

A variety of characteristics make properties more vulnerable to wildfires.

Another concern adjusters should consider is the increased proximity of residents to fire-prone areas. A study from the University of Wisconsin-Madison and the U.S. Forest Service proved that millions more people live in areas that are at risk to be in a wildfire’s path than previously. Property and data analytics company CoreLogic also reported that California had nearly 1.3 million housing units in danger of extreme wildfires, followed by Florida and Texas for most homes threatened as of 2022.

That makes wildfires – and the losses to homes and businesses that come from them – a risk to more policyholders. While many insurance policies cover fire damage to structures and personal property, wildfires may be an exception in high-risk areas. It’s essential for adjusters to know what is covered by an insured’s policy and to have an expert verify cause of loss before any settlement decisions are made.

2. Wind And Smoke Contribute To Loss Risks

A fire’s impacts can range from singe marks that affect only aesthetics to total devastation. But the flames are only a portion of the concern when it comes to wildfires.

Wind can spread the fire to larger areas by giving it the fuel it needs to keep burning or by picking up embers and taking them to nearby properties and vegetation. This contributes to new fires or heat exposures, according to a report by the Insurance Institute for Business and Home Safety.

Smoke drifting to properties away from a fire may cause losses.

Smoke drifting to properties away from a fire may cause losses.

Furthermore, wind patterns can influence areas that are nowhere near the source, including hundreds to thousands of miles from the fire location. While it’s not clear yet how many claims will come from the Canada wildfires due to smoke, policyholders throughout the Northeast could see, smell, and feel the smoke and ash that was carried by the wind in and around their properties. Smoke impacts include structural damages and losses to indoor and outdoor equipment such as HVAC systems and electronics.

The number of fires taking place and the risk to more policyholders may have adjusters thinking they should prepare themselves to immediately settle whatever wildfire-related claim comes in, but that isn’t the case.

3. Expert Assessment Is Key to Accurate Claim Resolutions

While wildfires can be potentially catastrophic for homes directly in their path, the same can’t be said for property farther away. Cleaning or repairs may be all that’s needed to return policyholders to pre-loss condition, and experts can determine scope of loss to help adjusters know how to proceed with the claim.

For example, many HVAC systems can be returned to pre-loss condition by a repair. The simplest resolution is safely washing soot and ash from the condenser coils in a way that doesn’t cause damage. When the air handling unit is running during the event, more repairs may be required such as cleaning smoke from the ductwork or evaporator coils. Individual components or the entire condensing unit may require replacement in extreme wildfire cases, but these are still considered a repair.

Property assessment experts will provide objective inspections to determine how much of the system was compromised or if repair costs or other extenuating circumstances, such as updated efficiency standards, would require a full system replacement. However, these scenarios are less likely than a repair.

This HVAC system had reported smoke and fire damage, but an expert assessment determined the failures were caused by wear and tear.

This HVAC system had reported smoke and fire damage, but an expert assessment determined the failures were caused by wear and tear.

In addition to scope of damage, property experts can verify cause of loss. Investigations often determine equipment was damaged by another peril, including wear and tear, or that it was working properly at the time of assessment. According to the HVACi 2022 Annual Claims Report, 9% of assessed HVAC and refrigeration equipment was reported as having smoke and fire damage while only 6% of all equipment had verified failures from this peril.

Whether a fire-related loss occurs in California, Texas, Florida, or another part of the country, don’t risk settling a claim inaccurately. Alpine Intel and its suite of services, including HVAC and refrigeration investigators HVACi, can provide expert property assessments to determine cause of loss and scope of damage to give carriers what they need to confidently and accurately settle a claim. Submit an assignment to confirm these details before making a settlement decision.


Get your copy of the Smoke and Fire Damage Guide

Your Guide to Smoke and Fire Damage to HVAC Systems

Explore our interactive smoke and fire claims guide to learn about common types of smoke and fire damage HVAC components are susceptible to, find out which components may ignite a fire, and discover more handy resources.

Adjusters should know as much as possible about how HVAC systems may be affected by smoke and fire to settle claims quickly and accurately. Refer to this guide and its complementary resources now and the next time you handle a smoke and fire claim.

Rethink Smoke and Fire Damages to HVAC Systems Webinar Recording

Some losses included in claims with HVAC systems may look like smoke and fire damages but aren’t. Know what to expect and which fire-related failures are common before settling another claim.

In the webinar Rethink Smoke and Fire Damages to HVAC Systems, Technical Education Manager Jay Dykstra discusses this peril’s effects on specific HVAC components and how to distinguish these damages from other causes of loss.

During the presentation, he’ll cover:

  • Reported versus actual cause of loss for HVAC systems in claims
  • HVAC components and system types frequently included in claims, such as condensing units, furnaces and air handlers, package units, and ductwork systems
  • Evidence of smoke, fire, and heat damages to residential and commercial HVAC systems
  • Real-life claim scenarios that show impacts caused by smoke and fire or other perils

Important: Pre-recorded webinars do not qualify for CE credit.

Watch the Webinar

Smoke and Fire Claim Case Study

Fire losses have been known to cause major damages to HVAC systems, both internally and externally. However, smoke and soot may not result in the same impacts. Before settling a claim with reported smoke and fire losses, it’s critical that adjusters verify that smoke or fire caused the HVAC system to malfunction and have an expert determine to what extent.

The HVAC system described in this claim assigned to HVACi was near an area that experienced a garage fire. The adjuster sought HVACi’s expert help to determine if the furnace and ductwork were affected and needed replacement.

Fill out the form to get your copy of the smoke and fire claim case study to see what the comprehensive assessment revealed and how we arrived at that conclusion.

Smoke and Fire Claim Case Study

Types of Fire Damages to Expect in HVAC Claims

Residential HVAC equipment is vulnerable to smoke and fire damage, but full replacement may not be necessary to return the HVAC system to pre-loss condition. Repairs may be sufficient for some components, and others may have sustained damage from a typically non-covered peril or may be non-damaged.

This guide details four common types of HVAC equipment damage reported in smoke and fire claims, as well as key signs of the damages.

Request your guide to settle claims accurately.

Smoke and Fire Damage to HVAC Systems Guide

Don’t Forget HVAC Repairs for Smoke & Fire Damage Claims

The following article, “Don’t forget HVAC repairs for smoke & fire damage claims” written by Jay Dykstra of HVACi and StrikeCheck, was originally published on Property Casualty 360.

Smoke and ash are just as damaging to HVAC systems as flames. Wildfires along Big Fall Creek Road, Lowell, Oregon. (Photo: Marcus Kauffman/CC BY 4.0)

After one California wildfire had subsided, the resulting smoke and ash took a toll on an HVAC system located in a home miles away. Soot had coated the condensing unit, the onsite inspection revealed, and it entered the indoor equipment and ductwork. While the diagnosis may seem like damage is extensive, adjusters should know this didn’t require a full system replacement — and neither will many of the claims with HVAC systems damaged by the onslaught of wildfires this year.

In 2019, approximately 48% of the HVAC systems that the insurance services company HVACi inspected for smoke and fire damage could be returned to pre-loss condition with a repair or were in proper working condition at the time of inspection.

In the aforementioned claim, the assessment found the electrical components weren’t affected, and the refrigerant pressures were aligned with manufacturer specifications. The split system could be returned to pre-loss condition by cleaning some components and switching out the furnace and ductwork. This is considered a major repair; however, not all wildfire-damaged HVAC systems will need this extent of work either.

Adjusters should know what to expect for claims with HVAC systems impacted by smoke and fire as well as be familiar with potential next steps to return the policyholder to pre-loss condition.


Ways HVAC systems can be affected

Wildfires — any fires — leave some telltale evidence if they are to blame for damages.


Direct fire

Direct fire causes major damage to components, as seen by this burned commercial furnace.

Direct contact with flames produces charring, burning, and melting. Outside components, including the condensing units for residential split systems and commercial packaged units, are most at risk for direct wildfire damage. Heat can also damage the refrigerant, which could require switching out indoor equipment in the refrigerant circuit, such as the line set and evaporator coil.

While direct fire causes more evident damage, adjusters still should assess for the scope of damage and verify if flames, heat or smoke affected the rest of the system.


Smoke, soot and ash

Regardless of where the fire is, internal and external HVAC components are at risk for damages from smoke, soot, and ash. These particles are pervasive because they’re transported through the air. A home that’s miles away from the nearest fire can still sustain major soot and ash damage.

Dirty filters are a common side effect of a nearby fire, but filters are easily replaceable without needing any other major repairs. 

HVAC systems can intensify damage by circulating smoke and the other elements throughout the property. Air filters can help trap larger particles, though policyholders will need to change filters more frequently. A clogged air filter can’t remove debris as well and makes the blower, which is also a target for smoke, work harder to pull needed air through the air handler. HVAC blowers that are forced to work harder could shorten the unit’s lifespan or increase utility bills over time. Similarly, the coils in the condensing unit can also become clogged and later lead to compressor motor problems.

Ductwork is also susceptible to smoke, soot and ash damage because these items stick to it.


High voltage surge

Another common peril related to wildfires is high voltage surge. This causes damage to the HVAC’s electrical components and has the potential to occur if there’s a power outage during or after a blaze. Surges don’t always result in visible damage and electrical components may need to be tested.

While wildfires may seem like an obvious cause of loss, it’s important adjusters confirm the damage is associated. Policyholders may think their HVAC systems aren’t working because a wildfire was nearby when in fact, the HVAC system sustained damage from age-related wear and tear, which is typically not a covered loss.


Repair options are available

One repair option may seem trivial, but it’s a viable one in some cases. When the ash is no longer hot, thorough equipment cleaning may resolve concerns.

Dirty coils don’t always need to be replaced and can sometimes be cleaned with solvents designed specifically for cleaning coils. 

Outdoor equipment is designed to get wet, so washing the cases and cabinets shouldn’t cause concern. Condenser coils can be washed with hoses, but pressure washers can actually cause damage and should be avoided. Specialty cleaning solvents are designed specifically for cleaning coils if it’s in good enough condition to be washed.

Some indoor equipment can also be cleaned, including supply and return registers or ductwork, depending on what it’s made of, where it is, and its condition before and after the fire. Flex duct is more fragile, and cleaning must be done without hard brushes or cleaners. Forced air and vacuuming equipment can loosen and remove the soot in cases of a light dry smoke loss, which is commonly seen from wildfires. Harder ducts can be cleaned with more invasive methods followed by forced air and vacuuming.

Evaporator coils and blowers are targets for smoke but can be more difficult to clean if they have to be removed for better access. Adjusters should consider if that still makes cleaning a cost-effective repair option for these components.

Adjusters will sometimes find it’s a better and more cost-effective solution to replace specific parts without requiring a full system replacement. Equipment compatibility, state and federal HVAC replacement regulations, and like kind and quality products priced at market value should all be considered.

Wildfires can cause massive devastation over a widespread area. Don’t assume fire-damaged HVAC systems are a total loss. A new condensing unit, while a major repair, is still less costly for your policyholder than a full system replacement.

Watch the Webinar

Smoke and Fire Claims Webinar Recording

A small kitchen fire, a furnace blaze, or a wildfire raging miles away from a home or business could all have impacts to a policyholder’s HVAC system. Adjusters may not realize all the different components that could be affected and what that could mean for a claim, which is why we’ve put together this webinar to offer a quick, but comprehensive, overview.

During this webinar, we will explore:

  • Commonly claimed HVAC systems and components
  • Ways smoke, fire, and heat damages HVAC equipment
  • How this peril has appeared in real-life claim scenarios

Watch our Smoke and Fire Claims webinar recording by filling out the form provided.

Important: Pre-recorded webinars do not qualify for CE credit.

Watch the Webinar

Fire Claim Case Study

Smoke and fire do have a way of impacting just about everything they come in contact with. But does that mean a full replacement of HVAC systems and ductwork is required?

The contractor for this commercial policyholder seemed to think so when submitting an estimate of nearly $100,000 in replacement costs. Had the adjuster taken it at face-value, the carrier would have sustained tens of thousands in dollars in claims leakage.

Fill out the form to read the case study that chronicles what our HVACi inspector saw when thoroughly inspecting the systems and what our team recommended the insurance carrier do to return the policyholder to pre-loss condition.

Request Your Case Study

Wildfire Claim Case Study

A major wildfire taking place close to a residence is a plausible reason for ductwork to become dirty and need replacement. But it’s important an adjuster takes the time to confirm cause of loss.

Fill out the form to receive your copy of the Wildfire Claim Case Study to read about the results of our inspection and recommendations. It will prove why adjusters should always call for an objective and knowledgeable second opinion to review complex equipment before they make settlement decisions.

Request Your Case Study

Smoke and Fire Damage to HVAC Systems Guide

Even taken literally, “Where there’s smoke, there’s fire” doesn’t always apply when talking about HVAC systems. If flames are across the room, smoke still has a way of traveling into places your policyholder may not notice. One of the prime locations is ductwork in commercial and residential HVAC systems, which could lead to additional concerns. And, though rarer, HVAC equipment could also ignite a fire.

Our guide covers both scenarios to ensure you have what you need to settle claims related to smoke and fire and HVAC systems. We outline six ways this peril could affect equipment, from the ductwork to the motors, and give a short overview of eight components that are most likely to start a fire and why.

Fill out the form to receive your guide for smoke and fire damage to HVAC systems to refer to when settling these kinds of claims.

Request Your Guide