What Changed
Nevada is now the first U.S. state to let insurers exclude wildfire coverage from standard homeowners policies, following the enactment of Assembly Bill 376 on January 1, 2026. Just eight months later, the Hawk Fire in Reno is challenging this new law, as 90,000 residents evacuate and test its effectiveness during a real catastrophe.
The law allows insurers to offer wildfire coverage as a separate product or exclude it entirely. Unlike California's earthquake exclusions or Florida's windstorm carve-outs, Nevada did this without creating a FAIR Plan, a state-backed market for homeowners who can't find standard coverage.
For claims and coverage counsel, this is a real-time test. Homeowners renewing policies after January 1 may find their wildfire protection gone without realizing it. Consumer advocates warned of this risk, and the Hawk Fire is turning that concern into actual claim denials.
Key Findings
Market pressure led to the legislative change. The Nevada Division of Insurance reported an 82% increase in wildfire-related policy non-renewals in 2023, with 481 homeowner policies not renewed. Total cancellations and non-renewals reached nearly 158,000. Homeowners saw rates rise 21% since 2018. AB376 passed unanimously in June 2025 to help insurers manage wildfire exposure or leave the state.
The law creates a coverage gap with no safety net. A proposal for a state-backed FAIR Plan failed in the same session. Most states with catastrophic peril exclusions have residual markets. Nevada homeowners who can't afford standalone wildfire coverage or don't have it offered have no guaranteed alternative.
Policy language varies by renewal date. Policies issued or renewed before January 1, 2026, generally include wildfire coverage. Those renewed after may exclude it, price it separately, or offer it as an optional endorsement. This creates a market where neighbors may have vastly different coverage based on renewal timing.
Consumer awareness is untested until claims are filed. The law doesn't require specific disclosure beyond standard policy documents. Critics warned that homeowners might not realize wildfire protection isn't automatic. The Hawk Fire will show how many policyholders understood their coverage changes when renewing.
The law could be a model for other states. Industry observers see AB376 as a market experiment that California and other Western states might follow. If Nevada maintains its insurer base without major coverage failures, others may adopt similar frameworks. If the Hawk Fire leads to widespread uninsured losses and backlash, the experiment could end.
What This Means for Your Team
If you advise clients in Nevada or other wildfire-prone areas, you need to recognize that catastrophic peril coverage isn't guaranteed. Wildfire protection is no longer a standard part of homeowners policies in Nevada and may soon change elsewhere.
For claims counsel, the immediate task is coverage determination. Any Hawk Fire claim from a policyholder with a post-January 1 renewal requires a detailed policy review. Did the insurer exclude wildfire? Was standalone coverage offered and declined? Was it unaffordable? Each scenario has different outcomes and potential disputes.
For coverage counsel advising insurers, the law's four-year sunset adds uncertainty. Policies written under AB376 may still be active when the law expires in 2029 unless extended. Check if your clients' wildfire exclusions have sunset clauses or operate independently.
For risk managers advising commercial property owners in Nevada, the shift in the residential market indicates where commercial lines might go. If insurers exclude wildfire from homeowners policies without a mass exit, they might do the same for commercial properties. Your clients should budget for standalone wildfire coverage separately.
Action Items by Priority
Review every Nevada policy renewed since January 1, 2026. Check the declarations page and endorsement schedule. Confirm if wildfire coverage is included, offered separately, or excluded. Do this before a claim is filed.
Document disclosure timing and content. If your client received renewal documents excluding wildfire, keep the notice language, the date sent, and proof of delivery. If a dispute arises, the quality of the insurer's disclosure will be crucial. If your client didn't receive clear notice, it could lead to a misrepresentation or bad faith claim.
Identify alternative coverage sources now. If your client's policy excludes wildfire, find out if standalone coverage is available and at what cost. If it's unavailable or too expensive, document this gap. It will be important if a loss occurs.
Track legislative developments in other Western states. California, Oregon, Washington, and Colorado face similar insurer withdrawal pressures. If they propose bills like AB376, your clients need to be informed. The outcome in Nevada will influence these discussions.
Prepare for aggregation disputes in mixed-coverage portfolios. If you represent an insurer with both pre-2026 policies with wildfire coverage and post-2026 policies without it, the Hawk Fire may raise aggregation questions. Does one wildfire event count as a single retention or multiple claims based on policy terms? Analyze this before claims come in.
