Severe drought conditions, high temperatures and dry conditions are increasing wildfire risk in a majority of the U.S., putting buildings and property in danger of damage and loss.
The greater Los Angeles wildfires of early 2025, described as the most destructive in the city’s history, could offer companies new insight to prepare facilities for fire events as weather trends evolve around the country.1
Much of the West and South U.S. continue to face varying drought intensities from severe to exceptional levels. According to the U.S. Drought Monitor, the high drought levels can have short- and long-term impacts on:2
- Agriculture
- Grasslands
- Hydrology
- Ecology
Experts noted the Los Angeles fires arrived at an unusual point in the year, and even after near-normal precipitation levels during early 2024. However, near-record summer temperatures throughout California and Nevada severely dried out that regional landscape by year-end.3 There was little or no precipitation in the weeks before the wildfires began.
The increase in drought severity, coupled with a longer wildfire season in areas typically not known for wildfire events, could make emergency plan updates prudent. Here are ways to get started.
What Is a Wildfire?
Wildfires are unplanned fires that burn in forests, grasslands and prairies.4 They are dangerous because they spread quickly and can burn large amounts of land. Homes, buildings and property damaged from wildfires are typically total losses.
Wildfire Events and Their Impact
In 2023, there were 56,580 reported wildfires throughout the United States, with more than 2.3 million acres burned, according to the National Interagency Fire Center.5 Those year-end numbers included the impact from the August 2023 Lahaina, Hawaii wildfire that killed more than 102 people with an estimated $4 billion to $6 billion in property and business interruption costs.6
Though 2023’s number was lower than previous annual totals between 2020-22, experts will await final 2024 data and information emerging from the 2025 Los Angeles wildfires to study the scope of business interruption with so many displaced homeowners and workers. In the earliest days of the Los Angeles disaster, total economic impact estimates ranged as high as $50 billion.
While environmental conditions vary regionally, drought is worsening nationwide. It’s a factor that decision-makers should consider building into their future emergency plans. Late 2024 news reports indicate 49 U.S. states are now facing drought conditions that can increase wildfire risk.7
How Do Droughts Impact Wildfires?
Severe drought levels create an environment that can easily ignite and spread. Of note, wildfire-cleared land has an increased risk for mudslides when rain or snow finally arrives.
Over the past two decades, drought conditions in the western U.S. have gradually worsened. Only 2% of the western U.S. was in extreme or exceptional drought before the 2020 wildfire season. With worsening drought conditions throughout the country, a steep learning curve could be ahead for risk managers everywhere.
As of January 2025, the U.S. Drought Monitor reported that these western and southern states were experiencing severe or extreme drought:
- Arizona
- California
- Colorado
- Kansas
- Mississippi
- Montana
- Nebraska
- Nevada
- New Mexico
- Tennessee
- Texas
- Wyoming
Extreme drought conditions in early 2025 were also present in the Midwestern states of Michigan and Minnesota and the Eastern states of Connecticut, Delaware, Massachusetts, New Jersey, New York and Pennsylvania.
Drought Conditions From 2000 to 2021
Over the past two decades, drought levels in the West have gotten more severe. This creates an environment that's dry and makes it easier to ignite and burn, causing wildfires that can rapidly spread.
Drought conditions for the year: 2000
Use the slider below to see how drought conditions across the United States have increased since 2000.
No Drought Exceptional Drought
How Wildfires Can Drive Commercial Property Losses
Wildfire damage generally relates to location and cause. While human-ignited wildfires can be devastating, natural catalysts beyond human control can potentially drive more damage. For example, rising drought conditions can make vegetation around facilities more flammable and severe wind patterns (a major issue during the January 2025 Los Angeles wildfires) can outrun fire response. Lightning strikes driven by more powerful storm systems can complicate the previous factors as well.
It’s clear that losses from wildfires and other natural disasters are becoming more frequent. Insurance companies are staying close to these trends, especially during the underwriting phase of issuing a new policy or the renewal process. Due to these loss trends, insurers are doing more risk sharing with customers, which can include a higher All Other Perils (AOP) deductible.
Are Wildfires Affected by Climate Change?
Climate change acts as an accelerant to wildfires. The U.S. Drought Monitor states that the last 12 months contributed to the fast intensification of the drought. As the West dealt with heat waves, the typical rain season that would cool off the region didn’t bring enough rainfall.
Growing evidence from researchers and experts show climate change is increasing weather volatility, making storms and natural disasters more frequent and severe. While wet seasons can help plants and vegetation grow, landscapes can quickly dry out, increasing the risk of a wildfire if there’s a severe drought.
What Are Some Safety Tips for Wildfires?
Although wildfires generally cause total losses to property, there are wildfire safety measures you can take.
It’s essential to have a disaster plan is essential in protecting property from wildfires and damages. The written plan should tell employees and even customers what to expect. If you don’t have a disaster plan, it’s not too late to create one.
Here are some key things you may want to include:
- Step-by-step instructions to minimize risk
- Directions for how to protect employees and property
- An evacuation plan
- Emergency numbers
- A designated crisis team
If you must close and evacuate your company because of a wildfire, a disaster plan can help with business continuity. Keep critical documents stored in a fire-resistant safe or store them off premises. Equally important, be sure to back up copies of your data.
If your business is in an area prone to wildfires or could be at risk in the future, it’s critical to include information on wildfire safety and preparedness in your plan.
You can also make building improvements, such as:
- Installing smoke detectors and automatic fire sprinklers in every building
- Connecting a fire alarm to a central station or local fire department
- Using window drapes with fire-retardant chemicals
- Putting mesh covers over exterior vents, around decks or attic openings to prevent outdoor embers from going inside the building
- Ensuring emergency vehicle access to your business’ property
If your business is in an area where there’s emerging wildfire risk, a conversation with local emergency and public works officials about wildfire capabilities may be helpful. Above all, checking in with your insurance carrier may reveal potential coverage gaps and new ways to reset companywide emergency planning.
1 Climate.gov, “Unusual Fire Risk Across the Northeast in Fall of 2024,” Climate.gov, viewed November 21, 2024.
2 U.S. Drought Monitor, viewed January 10, 2025.
3 “National Current Conditions,” Drought.gov, viewed January 10, 2025.
4 “Wildfires,” Ready.gov, viewed January 10, 2025.
5 “Wildfires and Acres,” National Interagency Fire Center, viewed January 10, 2025.
6 “Devastating Losses: Economic Toll from Maui Fires at Least $4 Billion, Moody’s Projects,” USA Today, viewed August 24, 2023.
7 USA Today, “49 States Are in Drought Conditions, Threatening Water Resources and Agriculture,” USA Today, viewed November 22, 2024.
8 “Wildfire Management,” National Integrated Drought Information System, viewed January 10, 2025.
The information provided in these materials is intended to be general and advisory in nature. It shall not be considered legal or medical advice. The Hartford does not warrant that the implementation of any view or recommendation contained herein will: (i) result in the elimination of any unsafe conditions at your business locations or with respect to your business operations; or (ii) be an appropriate legal or business practice. The Hartford assumes no responsibility for the control or correction of hazards or legal compliance with respect to your business practices, and the views and recommendations contained herein shall not constitute our undertaking, on your behalf or for the benefit of others, to determine or warrant that your business premises, locations or operations are safe or healthful, or are in compliance with any law, rule or regulation. Readers seeking to resolve specific safety, legal or business issues or concerns related to the information provided in these materials should consult their safety consultant, attorney or business advisors. All information and representations contained herein are as of July 2022.
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