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Wildfire destruction of 2012: How insurance rates will be affected

Posted On Wed, August 8, 2012

Over the course of the summer, wildfires have raged across the southwest, thriving in the windy drought conditions. With damage claims ringing in from multiple states, home insurance companies and potentially insurance rates are being affected.

Over the past weekend, wildfires cropped up across the state of Ohio due to increased winds. Fortunately, the fires abated at the beginning of the week, when the humidity finally rose and winds died down. With the devastation over, Oklahoma's Insurance Commissioner, John Doak, has begun to assess the damage and the impact on insurance companies.

According to Bloomberg, State Farm and Farmers' Insurance were most affected by the wildfires sweeping across the southwest. By the end of June, State Farm and Farmers were preparing to pay $5.2 million in insured losses. Last year, the total number rang up to $855 million - with $1.9 billion in economic losses. 

With the drought still blighting states across the country and the wildfires still burning in the southwest, insurance companies expect to lose a similar amount this year, unless the weather forecast changes drastically.

Still worse, according to Fox News, the more damages sustained by an area, the more homeowners' insurance  policyholders in that area can expect to pay for premiums the following year. So, the more disaster-struck an area becomes, the more its citizens have to pay for the insurance needed to live there.

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