In 2025, wildfires in Southern California destroyed more than 16,000 homes and businesses and cost insurers billions of dollars.
So far, 2026 has not produced a singular wildfire event as large as last year’s California fires, and many smaller fires do not attract widespread attention, making it easier for some organizations to overlook the threat. But forecasts suggest 2026 could actually be a more troublesome year for wildfires than 2025. AccuWeather anticipates that between 5.5 million to 8 million acres in the U.S. could burn in 2026 (opens a new window), a range that is higher than the 5.1 million acres damaged by wildfires last year. And the National Weather Service anticipates a higher potential for “above normal” fire activity in the southeastern U.S. and central Rockies this summer (opens a new window).
Here’s how you can prepare your commercial assets, operations, and people for wildfire risk in 2026.
Wildfires no longer a “secondary” peril
Global insured losses from natural catastrophes in 2025 totaled $108 billion, making it the sixth consecutive year that such losses exceeded $100 billion, according to Munich Re. More than 80% of those losses — $88 billion — occurred in the U.S.
A key difference in 2025, compared to past years, was that wildfires, not hurricanes, represented the leading cause of losses in the U.S. Hurricane Melissa cost insurers $9.8 billion in 2025; by comparison, the Southern California wildfires generated $40 billion in insured losses, enough to make it the costliest global wildfire event on record.
Like severe convective storms — another area of growing risk for insurers and property owners — wildfires have often been referred to in insurance circles as “secondary” perils. But the reality is that wildfires remain an ever-present threat to people and businesses across the U.S. And it’s no longer appropriate to look at these as a lesser risk.
That risk extends far beyond California and is not set to ease this year. We are seeing wildfires in areas where the risk has historically not been common, including Florida, Georgia, and Nebraska.
Moreover, AccuWeather expects that drought, higher temperatures, and below-average snowpack will contribute to persistent wildfire threats in Arizona, Utah, Nevada, Idaho, western Montana, and other areas of the Pacific Northwest. While AccuWeather’s forecast anticipates a smaller number of wildfires in 2026, it says the ones that do occur should be larger and harder to contain.
Although losses from 2025’s fires were largely concentrated in personal lines rather than commercial property, the next event, whether in California or elsewhere, could have more significant implications for commercial insurance buyers. This makes it all the more important that businesses be ready.
Traditional and parametric insurance
Businesses can obtain protection against wildfire losses through property all-risk insurance policies. In building effective property insurance policies, businesses must work carefully with their insurance brokers, as the market for wildfire risk is becoming more difficult as insurers seek to limit their systemic exposure to potential losses.
For companies whose properties are primarily or substantially in California, coverage may be more difficult to obtain during upcoming renewals than it was in the past. But the overall property market continues to improve for many buyers, and those seeking coverage for broad, diversified property portfolios may be able to benefit from favorable conditions.
Among other things, insurance buyers should work with their brokers to:
Prevent the addition of wildfire exclusions in policies, including language that may specifically exclude coverage for California wildfires.
Ensure policies provide coverage for smoke damage, which may not be included under an insurer’s standard property policy, along with secondary perils associated with wildfires — for example, landslides resulting from the destabilization of terrain due to firefighting efforts.
Ensure they have adequate limits given their potential loss exposure in California and elsewhere.
Businesses should also consider purchasing parametric insurance coverage for wildfire risks. Unlike traditional indemnity policies, parametric policies are triggered when predefined and measurable parameters are met. As a result, claims payments are often made in as little as 30 days, without the need for lengthy claims adjustment processes to be completed.
A parametric policy, moreover, could be designed to be triggered by a measurable deterioration of air quality within a specific geographic area in which a policyholder owns or operates one or more locations. This means that coverage under a parametric policy could apply in the absence of physical fire damage — and even if a wildfire occurs several miles away from a company site.
This can be highly valuable to a policyholder, which could see its income drop following a wildfire for various reasons beyond direct physical damage. These could include indirect physical damage, disruptions to key suppliers’ and service providers’ operations, and the loss of access to customers.
Businesses should work with their brokers to weigh the pros and cons of parametric policies and determine whether they can benefit from parametric coverage as either a supplement or alternative to traditional coverage. If a business chooses to purchase a parametric policy, its broker can help to design the policy, including selecting an appropriate coverage trigger and other key policy elements.
Planning and preparation
Beyond purchasing insurance, companies in wildfire-prone areas can take several steps to make sure they are ready for potential wildfires and can mitigate their potential effects.
1. Develop an emergency action plan. Well before a wildfire approaches, companies should ensure they have updated emergency action plans in place. These plans should identify a core emergency response team and define their specific roles and responsibilities. Plans also should outline a process for evacuating personnel and shutting down operations, if necessary, and identify alternate backup locations that can take on key functions in the event a location is destroyed by a fire. Specific actions should include:
Monitoring the progress of fires regularly through federal, state, and local fire-tracking websites and other reliable sources.
Ensuring fire suppression systems and functional and deploying short-term fire retardants, outdoor sprinklers, and water systems.
Relocating or removing vehicles, critical electronics, stock, and supplies, including ignitable liquids.
Backing up computer servers.
Photographing buildings and contents for valuation.
Shutting down HVAC and combustible liquid and gas systems.
Placing equipment in safe mode.
2. Create defensive spaces around properties. Businesses should create defensible spaces around key properties and take steps to help limit or slow fires. This includes removing any combustible vegetation and debris on or near properties, removing trees that overhang buildings, cleaning leaves from gutters, and regularly watering foliage.
3. Prepare for recovery. Stocking long-term fire retardants and prearranging property restoration services to clean, repair, and potentially salvage buildings and equipment can speed recover after a wildfire. Maintaining up-to-date inventories and accurate asset valuations can also streamline insurance claims and reduce disputes over replacement costs.
Taking action before and after wildfires
As a wildfire approaches, businesses should continuously monitor its progress and activate their emergency action plans. Ensure fire protection is fully functional and in automatic mode, relocate trucks, stock, and supplies, and appropriately store or relocate ignitable liquids. Also plan for the shutdown of operations and utilities, remove critical electronics, back up computer servers, and photograph buildings and contents for later comparison.
When a wildfire is imminent, businesses should evacuate all personnel, if not done already, and:
Close building doors and windows, and place noncombustible covers on air intakes and events.
Deploy short-term fire retardants or outdoor sprinkler or watering systems.
Shut down HVAC systems, smoke evacuation systems, and combustible liquid and gas systems.
Place equipment in safe mode.
Ensure fire suppression systems are functional and in automatic mode.
After the wildfire, the focus should shift to secure sites and surveying for damage. Risk professionals and others should be mindful that structural supports may be compromised and watch for hot coals or embers, live electrical wires, downed power lines, broken glass, and sharp metal, all of which may make it difficult to access sites.
Personnel should assess buildings externally before entering; if safe to do so, they should inspect walls, windows, roofs, doors, and other structural elements. Personnel should also check electrical panels and breakers and not operate them if damaged.
After assessing potential damage, businesses should begin the cleaning and salvage process. Engage reputable restoration services and any additional vendors, such as electricians, and contact local fire departments to inform them of any impairments.
In the event of damage, businesses should immediately notify their insurance brokers and carriers. For claims under traditional property insurance policies, documentation is key: Businesses should capture visual evidence — including photos and videos, which may be taken with the aid of drones — and keep receipts and invoices for any extra expenses incurred. A separate accounting code for these expenses could help companies stay on top of them and more easily report them to insurers.
Ultimately, wildfire readiness hinges on planning, preparation, and risk transfer. Taking these steps now can help businesses prepare for what’s ahead and better position them to respond to and recover from potential fires.