Great question! The insurance risk in fire prone areas is going to increase costs. Will it get to the point that only a state supported plan will provide coverage in high fire areas as per hurricane areas? IDK. But the costs are real. On coastal policies we have an automatic 2% deductible if it's a named storm. This might be adopted for fire areas for named fires. If you are buying in a fire dependent ecosystem, odds are it WILL burn. The inholdings in Natl Forests and Parks have allowed development where houses should never have been built. Every US taxpayer pays for fire suppression on federal lands. The Smokies fire in eastern hardwoods was a one off. CA fires are a given. Looking back from a systems viewpoint, the current western fuel load problem is partly due to the fire suppression at all costs in fire prone western areas starting in the mid-1900's. The fire dependent longleaf pine forests in the South have always incorporated prescribed burning in forest management.
I can share some experience with hurricanes. After 30 years of owning coastal properties, my hurricane karma disappeared in year 26. I Learned a new lesson in 2019 with Hurricane Dorian. BoA had the mortgage (15 years into it) and had a threshold for insurance claims where they hold ALL claim funds until they were 95% complete as determined by THEIR inspector. They couldn't define the criteria for "95%". They also wanted a GC hired, an expense which the claim did not cover. This was a small house in a terrific location so the lot was 4x more valuable than the house. It needed a roofer, dry wall guy, siding repair, all who expected to be paid right after the work was done. My claim was $200 over BoA's limit. No amount of discussion on my part would get around their rules. If I ever look for a mortgage in a high risk area again, I will determine their disaster insurance claims policy in advance and use that as part of choosing the loan provider.
As mentioned by another poster, getting repairs done after a major disaster is difficult and expensive. Not enough contractors to go around and lots of non-locals descending on the area. After the 2nd of about 7 calls to "fix my roof", I had fun getting snarky with "oh have you seen the roof? It's gone. Nothing left to fix. Haha". (IDK how they got my phone number.)
If you're not within a daily drive of the area, it's difficult to get status info. Also not enough claims adjusters. Took 6 weeks for an adjuster to get to my 2018 Hurricane Michael loss. That gulf front house was wiped off the lot. Thankfully, the policy did pay in full. NOAA posts new satellite imagery a few days after disasters so I knew the house was gone.
Friends with partially damaged homes had a tougher time getting fair settlements. With two policies (wind and flood), you run into the insurance companies dickering over "did it blow away or wash away?". And if you need to go to the area after roads are open, be prepared to stay hours away as any housing in the vicinity will be taken up by FEMA, insurance workers, cleanup contractors. So be prepared for a slow recovery. Don't have anything in the house you can't afford to lose (good rule for all strs). Keep a current inventory of contents. Keep your reserves up and don't over leverage.
There's always risk. Who saw a pandemic coming that would shut down Disney World? Each person has to stay eyes wide open, determine your own risk tolerance, and set your own path.
