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

Complex Commercial HVAC Claims Case Study

Commercial HVAC claims may be more complex for adjusters to resolve than residential claims, since they often include multiple different types of systems with varied damages, or even multiple causes of loss. There is also a risk of claims leakage if the adjuster decides to settle for unnecessary replacements.

In our Complex Commercial HVAC Claims Case Study, you can read how HVACi’s team of experts identified the cause of loss to 35 different systems in a hail claim, including evaporative coolers, exhaust fans, and package units. You’ll also see how repair vs. replacement recommendations and market value pricing verification, included in every HVACi report, provided the adjuster with information for an accurate settlement.

Fill out the form to get your copy of this case study today and learn how HVACi provides actionable data for complex claims.

Read the Commercial HVAC Case Study

Beyond the Basics: Advanced HVAC Systems Webinar

The Beyond the Basics: Advanced HVAC Systems Webinar has already occurred. You can watch the recording here.

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

Go beyond split systems and package units to learn more about evaporative coolers, geothermal systems, make-up air units, economizers, and refrigeration systems, which are used by commercial and residential policyholders.

Fill out the form to watch Alpine Intel’s Technical Education Manager Jay Dykstra as he presents:
• An overview of more advanced HVAC systems, such as geothermal systems, economizers, and evaporative coolers, and how they work
• Descriptions of how perils and damages affect this equipment
• The significance of advanced HVAC system claims
• Results from real-life claims

3 Commonly Reported Summer HVAC Losses

Summer months see an uptick in HVAC claims as many policyholders turn on their air conditioning for the first time all year. Resolving these claims without an expert assessment may lead to inaccurate settlements based on wrong causes of loss; in 2022, 58% of residential claims involving HVAC and refrigeration systems were recategorized following an HVACi inspection.  Make sure you know the actual cause of loss and get repair vs. replacement recommendations before you close the claim. Here’s some background on the most commonly reported causes of loss between June and September – lightning, hail, and wind – and what evaluations reveal.Policyholders – and you – want quick resolutions to summer HVAC claims. An expert assessment could prevent inaccurate settlement without prolonging the life of a claim.

Policyholders – and you – want quick resolutions to summer HVAC claims. An expert assessment could prevent inaccurate settlement without prolonging the life of a claim.


Lightning is a commonly reported cause of loss throughout the year. In the summer months, it’s the stated cause of loss for about one-fifth of HVAC system claims assessed by HVACi but is the actual cause for only about 1% of them.

According to the National Weather Service, lightning strikes about 25 million times each year in the United States. Though direct strikes to property are rare, equipment can sustain collateral damage from nearby strikes. Evidence of a lightning-caused fire in the attic introduces the possibility of smoke and soot damage throughout the system.

Direct and collateral damage from a lightning strike may include soot and charring to condensing units and other system components.

Direct and collateral damage from a lightning strike may include soot and charring to condensing units and other system components.

If lightning strikes a house, low voltage issues like control boards failure or malfunctioning thermostats are also potential indicators of collateral damage. Other visible lightning evidence includes arcing, ghosting, damage to structural components like the chimney or siding, evidence of direct strikes to nearby trees, and wiring insulation that has melted from the inside out.

For each loss, an expert assessment is necessary for more than just confirming the cause. Repair vs. replacement recommendations from a team familiar with the equipment support an accurate settlement decision. Coupled with verified market value pricing, these recommendations can also help you avoid indemnity leakage.

Average Summer Lightning Claim Accuracy for Residential Claims: $7,024

Reference this guide and Find the Cause of Loss in a Flash when you’re faced with a claim in which lightning is the reported cause of loss.


Hail is most common between April and August, with most summer HVAC claims reporting hail as a cause of loss coming in during June and July, then tapering off. Residential equipment assessments confirmed hail was responsible for about 5% of summer losses. More importantly, almost 80% of hail-impacted equipment can be repaired without a replacement.

Other causes of loss may be mistaken for hail damage, but experts familiar with the equipment in question can tell the difference. Many perils can dent or flatten the coil and/or aluminum fins within the condensing unit. However, if this damage is randomly spaced out and there are dents in the coils, fins, or casing, hail is a likely cause of loss. Sometimes the outline of the impacting hail is visible in the damage.

Dents in the fins that are random rather than linear are evidence of likely hail damage.

Dents in the fins that are random rather than linear are evidence of likely hail damage.

Average Summer Hail Claim Accuracy for Residential Claims: $4,735

Summer isn’t the only season for hail-related HVAC claims. To get the facts of how hail and wind affect equipment in the spring, head over to Impacts to HVAC Systems Frequently Appearing in Wind and Hail Claims.


You’re most likely to see summer wind claims later in the season. Last year, HVACi determined 13% of HVAC losses that occurred in August and September were caused by wind.

Wind can cause direct damage to condensing units by shifting them out of position or blowing them over. However, high winds may also lead the environment around the equipment to cause damage, such as blowing airborne particles, light debris, and even branches and uprooted trees into the HVAC equipment. Wind-damaged fins may be able to be combed out and condenser coils cleaned, but any damage should be assessed by an expert familiar with the equipment to ensure an objective, accurate claim resolution.

While some damages may be as small as particles clogging the fins, HVAC equipment can sustain impact damages as the result of high winds.

While some damages may be as small as particles clogging the fins, HVAC equipment can sustain impact damages as the result of high winds.

Average Summer Wind Claim Accuracy for Residential Claims: $5,639

To see how HVACi experts offered one adjuster the best next steps for two residential split systems in lieu of an unnecessary settlement for two residential split systems, read our Wind Claim Case Study.

Don’t forgo an expert assessment of HVAC and refrigeration equipment because the cause of loss seems obvious. The HVACi team confirms the actual cause quickly and accurately, with an average cycle time of 5 days for residential assignments. We also provide repair vs. replacement recommendations supported by evidence and verified market value pricing. Submit an assignment today.

Download the Wind Damage to HVAC Condensing Units Guide

Why Are Insurance Customers Turning to Geothermal?

Insurance customers are concerned about sustainability, their environmental impact, and cutting energy costs. One of the ways homeowners have found to help both the environment and their wallets is turning to geothermal systems for their heating and cooling needs. According to the U.S. Department of Energy, there were 2 million commercial and residential geothermal heat pumps in use across the country in 2019, but they expect that number to rise to 28 million by 2050.

As this technology becomes more popular, adjusters should expect to see geothermal systems included more frequently in claims. Geothermal systems pose unique claims resolution challenges, and objective expert assessments may be required to help resolve claims accurately.

Closed horizontal loops are good for properties with more land that can be used for pipes, which are buried in trenches hundreds of feet long and several feet deep.

What Are Geothermal Systems?

Knowing the fundamentals of geothermal systems can help adjusters settle these complex claims. This equipment relies on the Earth’s constant subsurface temperatures to heat and cool off a home, instead of burning oil or natural gas. Loops are buried below the frost line where temperatures are consistently 50-60 degrees Fahrenheit. Heat is absorbed or expelled, depending on the policyholder’s preferences. The loops feed into the home’s air handler so the air can be circulated throughout the space.

Standard closed loop systems use a mix of water and antifreeze that circulates throughout the pipes and is reused.

 Why Are Insurance Customers Turning to Geothermal Systems?

  1. Sustainability – The Earth maintains an average temperature between 50-60 degrees underground year-round, so geothermal energy is renewable. Geothermal systems are more sustainable than HVAC systems fueled by oil or natural gas. They’re more efficient, too, reducing household energy use by 30-60%.
  1. Environmental Impact – Closed loop systems don’t discharge anything into the resource the energy is drawn from or emit greenhouse gasses, so they have a low environmental impact.
  1. Savings – By investing in geothermal systems, policyholders can save money they’d be spending on other resources, such as electricity, natural gas, or oil. While there may be a large outlay of funds upfront, energy savings defray that cost over time, and homeowners eventually reap the cost-saving benefits. Federal tax credits are also available for homeowners using geothermal heat pumps, providing an additional financial incentive.

Geothermal systems must be buried within the earth or at least 8 feet of water and may require drilling to install.

Which Perils Impact Geothermal Systems?

Geothermal systems are different from more traditional HVAC systems, but they are impacted by similar causes of loss that adjusters need to verify before settling a claim. Certain equipment, like the air handler or heat pump, will likely be connected to the electrical grid. These components are susceptible to high voltage surge. In the event of electrical problems or a lightning strike, these components could ignite a fire. They could also be damaged by smoke and fire from a different point of origin.

External components connecting the home to the geothermal system’s loops could be susceptible to freezing conditions and foreign object impact, particularly during windstorms. Geothermal systems are also vulnerable to impacts from wear and tear. Finally, it’s possible for non-damaged equipment to be included in claims.

This geothermal heat pump’s control board and wiring show evidence of arcing associated with high voltage surge.

How Can Geothermal Systems Complicate Claims?

In addition to verifying cause of loss for geothermal systems, adjusters may have a more difficult time determining an accurate settlement. Upfront costs for geothermal equipment is on average 30%-40% higher than other systems, and replacement costs could be higher, too. Furthermore, given that so much of the equipment is buried, labor and the use of heavy machinery to access it mean additional costs.

However, repairs to the surface level components may be sufficient to return a geothermal system to pre-loss condition, avoiding unnecessary equipment replacement. An expert may be required to confirm the cause and scope of damage, determine the system’s reparability, and provide recommendations for Like Kind and Quality equipment. Adjusters need to ensure they’re consulting HVAC experts who are familiar with geothermal systems.

Closed vertical loops are among the multiple types of loops used in geothermal systems. They are frequently used for residential or commercial properties with small lots. Pipes are buried hundreds of feet deep and connected with U-bend pipes.

 HVAC Investigators (HVACi) can quickly match claims for geothermal systems with qualified subject matter experts well-versed in all types of residential and commercial HVAC systems. HVACi simplifies how claims are settled through its fact-driven processes and use of engineering best practices, relying on just the facts to enable insurance professionals to settle HVAC claims more quickly and with a higher degree of accuracy.

Submit an assignment for a geothermal system, or any other commercial or residential HVAC system, to find out how HVACi can help you find the next best steps.


Learn more about types of geothermal systems

HVAC System Energy Efficiency Standards Guide

The U.S. Department of Energy updated HVAC system efficiency standards, effective Jan. 1, 2023. They dictate a rating all HVAC equipment must meet based on specified testing and location. Adjusters should understand what these changes mean and how they can impact future claims.

Fill out the form to receive your one-page HVAC System Energy Efficiency Standards guide.

You’ll learn more about:

  • What the required efficiency minimums are
  • How the ratings are determined
  • How ratings vary in different parts of the country
  • Key terms to know
  • Compliance rules
  • How more efficient replacements affect current equipment

Download the Guide Now

Adjuster Course in HVAC Refrigerant

The ban on the production and importation of virgin R-22, frequently used in HVAC systems, took effect in 2020 following a years-long phase out of these refrigerants. The same thing is happening for the next most popular refrigerant for HVAC systems, R-410A.

Through the Adjuster Course in HVAC Refrigerant interactive guide, you’ll see more information about:

  • Why refrigerant is so important to HVAC systems
  • A timeline of refrigerant changes and the phase downs
  • What could be next for HVAC refrigerants
  • What these rules mean for claims

Fill out the form to get the link to your interactive guide to learn all about it.

Get Your Interactive Guide Now

Residential HVAC System Fundamentals eBook

Policyholders in warmer parts of the United States may have a heat pump instead of a boiler or furnace. If air is less humid, they may opt to cool a space with an evaporative cooler. Regardless of what type of HVAC system it is, it’s likely that at some point a residential insured’s equipment isn’t going to function properly and will wind up in a claim on your to-do list.

Keep the Residential HVAC System Fundamentals eBook handy to refer to when handling these claims. You’ll have brief overviews and labeled diagrams of the most frequently used residential HVAC systems in one easy-to-read document.

System types include:

  • Split Systems
  • Package Units
  • Mini-Split Systems
  • Geothermal Systems
  • Heat Pumps
  • Boilers
  • Evaporative Coolers

You’ll also have a glossary of the key components and heating and cooling processes for split systems, which are the most widely used by residential policyholders.

Fill out the form to receive your copy of the Residential HVAC System Fundamentals eBook.

Request Your Copy

Top Reported Perils vs. Actual Cause of Loss Adjusters See in Split System Claims


Residential policyholders use split systems more than any other HVAC system. Indoor and outdoor components make split systems susceptible to different perils.

More than 80% of the residential HVAC systems that HVACi assessed last year were split systems, according to the CCG IQ 2021 Annual Report. Among the reasons for their popularity are that split systems easily distribute conditioned air to a specific space, are efficient, and can offer versatile installations. However, with equipment housed both indoors and out, these complex systems are susceptible to impacts from multiple hazards. Adjusters should take note of which causes of loss policyholders report most often in claims – and which perils are verified during expert equipment evaluations.

Most Often Reported Causes of Loss

Not all claims have a known cause of loss. Many claims are filed without any perils listed. Adjusters who don’t obtain equipment assessments to determine cause of loss risk giving a settlement for non-damaged equipment or components impacted by a non-covered peril.

Policyholders frequently report lightning as the cause of a failure. When an HVAC system malfunctions following a major thunderstorm, insureds often assume lightning is the source of the loss. They may further assume their HVAC systems require a full replacement. Neither are typically true.

Less than 1% of split systems assessed each year have an evaluation result that confirms direct lightning. Furthermore, minor to moderate repairs will return most split systems to pre-loss condition, regardless of peril.

Extreme weather conditions often result in new claims.

Other commonly reported causes of loss are related to the weather, including hail, wind, or freezing conditions. While they could like obvious causes of loss, claims stemming from a winter storm that affected Texas in 2021 proved that not all claims following a catastrophic event included equipment that sustained damage from a covered peril.

Perils Verified to Impact Split Systems

Nearly half of all HVAC system assessments completed by HVACi were recategorized to a different peril from what policyholders reported or the claims had listed. Many comprehensive assessment results determined equipment failed because of wear and tear or weather-related perils.

Wear And Tear

Adjusters should know that a common cause of loss impacting split systems is wear and tear, which is not typically covered by insurance. Central air HVAC systems are designed to last 15 to 20 years, according to the U.S. Energy Department; however, extenuating circumstances could accelerate wear and tear.

This peril impacts indoor and outdoor equipment. Characteristics could include, but are not limited to, visible impacts, damage caused over time, failed connections, and refrigerant leaks.

High Voltage Surge

Though lightning is frequently reported, high voltage surge is more likely. A nearby lightning strike, electrical grid changes, high-power electrical devices powering on or off, power outages, and other events that cause voltage fluctuations in the electrical circuit could trigger it.

This HVAC system control board had a noticeable arc mark caused by a high voltage surge, though visible evidence is not always present for this loss.

Like wear and tear, high voltage surge impacts indoor and outdoor equipment. Characteristics that occur with high voltage surge failures include damage caused by electrostatic discharge, multiple affected components, and immediate malfunctions. Visible evidence of high voltage surge is not always present. Find out more about how to tell the difference between HVAC failures caused by lightning, surge, and wear and tear in this guide.

Weather-Related Perils

HVAC systems are susceptible to weather-related perils. Adjusters may see increases in claims with hail, water, or wind losses following a catastrophic event.

Hail can affect several outdoor components, particularly condensing units that have malleable fins protecting the refrigerant tubes. Hail impacts may be visible but do not affect HVAC system functionality. Minor repairs such as combing or replacing the condensing coil are typical methods to return equipment to pre-loss condition.

The cause of loss may seem obvious, such as a tree limb striking a condensing unit, water flooding a basement furnace, or hail striking condensing coil. Objective assessments verify the reported peril and determine the damage scope. Even if a more major repair is necessary, full replacements aren’t required in most scenarios.

Don’t Forget About Non-Damaged Equipment

The previously mentioned perils impact split systems, but it’s important to remember that not all equipment included in claims will actually be damaged.

HVACi determined that nearly one-third of the HVAC systems included in claims in 2021 were non-damaged at the time of assessment. Settling for these adds unnecessary claims leakage for the carrier.

Equipment evaluations can prevent that. They should be objective, data-driven, and actionable. The experts at HVACi help adjusters nationwide decide claim solutions through comprehensive onsite assessments. Reports note cause of loss, best repair and replacement recommendations, and market value pricing for available equipment without slowing down the claim process. Submit a claim to confirm a peril before making a settlement decision.

Get your lightning, surge, vs wear and tear guide