As Wildfires Get Worse, Insurers Pull Back From Riskiest Areas

“It’s not necessarily the property that’s being evaluated,” Mr. Biskupiak said. “It’s about where the fire could potentially start.”

Insurers have used that information to be more discriminating about what they choose to cover. “Company A, B or C has insured me for 10 years — I’ve never had a loss,” Mr. Biskupiak said, recounting the type of complaint he’s heard. “And then all of a sudden this year they’re non-renewing me.”

This month his office issued a public notice warning companies against refusing coverage just because of a wildfire elsewhere in the same ZIP code or county.

“The state auditor’s office has recently received several phone calls and heard from local officials in Lewis and Clark County that some insurance companies are denying coverage for homes, cars, and boats due to the North Hills wildfire, even though the properties weren’t located anywhere near that fire,” the department wrote.

Colorado has also seen an uptick in complaints, according to Peg Brown, the state’s deputy insurance commissioner. She said her office was considering instructing insurers to provide more data on how many people are being dropped, so it can measure the change.

“It’s a significant issue,” Ms. Brown said. “We’re trying to get a little bit ahead of it.”

The question is whether insurers will move back into those areas if their financial reserves recover and the memory of damage fades, as has sometimes happened following previous large-scale disasters, according to Dr. Kousky of the Wharton Risk Center.

She said there’s reason to believe this time is different.

“These perils are changing,” Dr. Kousky said. And if the pullback by insurers proves lasting, it would require a greater role for governments in financing reconstruction after disasters, while compelling a shift in where and how we build homes. “There’s not one solution that would nicely solve this,” she said.

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