What Wildfire-Specific Policy Restrictions Mean for Your Portfolio If your institution holds assets in areas where catastrophic wildfires are becoming more frequent — think California, Oregon, Arizona and parts of the Rockies — you may have unidentified and unmanaged risk lurking in your coverage monitoring process. Identifying Insufficiencies in Wildfire Coverage The first step in protecting your institution is identifying where your exposure lies, which starts with location-based risk awareness and a policy-level detail review. Where Are the Wildfire High-Risk Areas? FEMA offers a powerful tool to assess wildfire risk that combines both historical data and projected future conditions. Use this to identify hot spots in your portfolio: • Read FEMA’s Wildfire Risk Overview at hazards.fema.gov/nri/wildfire. • Explore the FEMA Risk Map at hazards.fema.gov/nri/map. Understanding these zones helps you prioritize reviews of borrower coverage in at-risk areas. Digging Into the Policy Details Insurers vary significantly in their approach to wildfire risk. That’s why a generic review isn’t enough. You need to: • Examine deductible structures for wildfire claims. • Look for wildfire exclusions and limits in the policies. These elements are often buried deep in policy declarations and endorsements, making them easy to miss without a rigorous insurance tracking process. Consider adding a partner offering insurance tracking services to ensure your institution’s assets are adequately covered and compliant with evolving wildfire risk standards. Summary As wildfire risks intensify, coverage gaps in standard policies are leaving lenders and servicers increasingly exposed. Proactively identifying high-risk areas, reviewing policy terms and confirming adequate borrower protection are essential steps to mitigate financial impact and strengthen portfolio resilience. 19 Colorado Banker
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