The Insurance Institute for Business and Home Safety (IBHS) has updated its Wildfire Prepared program, introducing formal standards for multifamily properties and neighborhoods alongside revised requirements for single-family homes, as the US insurance industry continues to grapple with a deepening wildfire coverage crisis.
The updates extend the program's science-based mitigation framework beyond individual homes to address wildfire risk at both the building and neighborhood level, targeting two of the most significant drivers of wildfire loss - home ignition and structure-to-structure fire spread.
Steve Hawks, senior director for wildfire at IBHS, said the coordinated approach was central to the program's effectiveness.
"The decisions you make to protect your home can directly affect the homes around you during a wildfire. These updates will help more families and communities take a coordinated approach to stop fire spread from block to block," said Hawks.
The update formally introduces Wildfire Prepared Neighborhood, first piloted with national homebuilder KB Home at sites in both Southern and Northern California, and Wildfire Prepared Multifamily, which sets mitigation standards for owners of duplexes, townhomes, apartments and condominiums. Both designations offer Essential and Enhanced levels, aligned with the same mitigation principles that govern the existing single-family standard.
IBHS has also revised the Wildfire Prepared Home standard based on field research and homeowner feedback, updating tree and shrub guidance and providing clearer direction on decks and attached structures.
Hawks said the program's ongoing evolution was driven directly by research conducted in the field and at the IBHS Research Center.
"That's how we ensure homeowners, builders and multifamily community property owners can take actions that are both effective and achievable, improving survivability while supporting long-term insurability."
The program expansion arrives as the US wildfire insurance market faces acute structural pressure.
Between September 2024 and December 2025, enrollment in California's FAIR Plan surged 43% as insurers pulled back from the state following a series of catastrophic wildfires, including the Los Angeles fires that caused an estimated $40 billion in losses.
The FAIR Plan's total exposure nearly quintupled over five years, reaching $700 billion in September 2025, with around 650,000 policies in force. As of March 2025, insurance companies had already been hit with a $1 billion industry assessment due to the FAIR Plan's losses from the Los Angeles wildfires alone.
The retreat of private carriers has been significant. From 2019 to 2024, more than 100,000 homeowners lost coverage due to carrier exits and non-renewals. State Farm, California's largest homeowners insurer, incurred $7.6 billion in catastrophe losses from the 2025 wildfires and subsequently secured approval for a 17% rate increases while pulling back on writing new policies in the state.
The Wildfire Prepared designation is increasingly relevant as an underwriting tool rather than simply a consumer program.
Some carriers that will not write policies on uncertified homes in high-risk areas will write them on IBHS-certified properties, while others offer premium discounts of between 10% and 20% for certified homes. Mercury Insurance formalized this link in May 2025, partnering with IBHS to allow policyholders in wildfire-susceptible areas to qualify for a discount on the catastrophe fire portion of their premium by earning the Wildfire Prepared Home designation.
Regulatory reform is reinforcing the commercial case for mitigation-linked pricing. Changes in California now permit the use of more sophisticated wildfire risk models for ratemaking, enabling insurers to recognize mitigation measures such as defensible space, home hardening and community-level risk reduction when pricing policies. Colorado followed with legislation effective January 2026 requiring insurers to incorporate structural hardening efforts into their pricing models and to provide homeowners with a plain-language explanation of their wildfire risk score.
The expansion into 14 states means that approximately 4.8 million homes in high or extreme wildfire risk areas are now eligible for the designation, with the program now covering all western US states and Florida. The extension to multifamily and neighborhood-level standards broadens the program's relevance considerably.
Multifamily properties present particular challenges in wildfire-prone areas, as a single structure can affect hundreds of policyholders simultaneously, while neighborhood-level standards give underwriters a framework for assessing community-wide risk rather than individual properties in isolation.
