California homeowner calculates wildfire upgrade savings and finds insurance break is only $6.70

"It's the fact that insurers have the right to refuse coverage."

A California homeowner was initially excited to learn that insurers were offering discounts to customers who take steps to reduce wildfire risk.

But after going through credits tied to 10 mitigation categories, the homeowner discovered that each measure was worth just 67 cents a year, for a total annual savings of $6.70, even as insurers push more homeowners to make those improvements.

Here's what to know

The homeowner shared the results on Reddit's r/Insurance forum, saying that several carriers, including Mercury, Farmers, and AAA, offered discounts for actions such as creating defensible space, enclosing eaves, and installing ember-resistant vents.

After checking the fine print, the poster said the incentives amounted to very little. "Needless to say, I won't be spending thousands on home upgrades to save $6.70 on annual insurance premiums," they wrote.

Still, the poster said some projects may be worthwhile even without meaningful insurance savings. They highlighted what they called the "big three": a Class A fire-rated roof, ember-resistant vents, and a five-foot buffer around the home cleared of vegetation and other combustible material. Together, they said, those measures can cut wildfire risk by more than 60%.

One commenter said they had found percentage-based credits online, but the poster replied that the numbers came directly from their AAA paperwork.

"Here's the thing you're missing — if you don't perform wildfire mitigation, you may no longer be eligible for insurance with some particular insurers; so it's not so much the discount, it's the fact that insurers have the right to refuse coverage for policyholders outside their underwriting guidelines," another user wrote.

The discussion also covered other wildfire-hardening steps insurers may evaluate, including clearing vegetation under decks, keeping combustible fences or gates away from the house, making sure no combustible structure is within 30 feet of the home, using enclosed eaves and multipane windows, and having at least 6 inches of noncombustible siding above ground level.

Even if the credits are minimal, some of those improvements may still make sense. The homeowner concluded that they would likely go ahead with the big three changes, even though insurance was "a total non-factor" in the decision.

Where can I learn more?

Wildfire risk has intensified a broader dispute over what insurers require from homeowners and what they provide in return.

• In Colorado, lawmakers approved discounts for wildfire mitigation in home insurance pricing.

• Iowa's insurance commissioner warned that California wildfire losses could lead to higher premiums.

• In California, one major insurer's retreat from new policies reduced coverage options for homeowners.