New Insurance Law Exposes Some Nevada Homeowners to Major Financial Risk in 2026
Homeowners across Nevada are being urged to prepare for significant changes to their home insurance coverage as a new law takes effect in January 2026. The legislation marks a major shift in what insurers are required to cover regarding wildfire damage, and experts warn it could leave many homeowners facing serious financial exposure.
Beginning January 1, Nevada will launch a four-year “sandbox” experiment aimed at stabilizing the state’s struggling home insurance market. (The initiative is referred to as a sandbox because it provides a controlled environment for insurance companies to experiment with innovative wildfire insurance policies.) Under this new framework, insurance companies will be allowed to offer homeowners policies that no longer automatically include coverage for certain events. Most notably, insurers will be permitted to exclude wildfire damage from standard home insurance policies or offer that protection only as an add-on at an additional cost.
This is the first time wildfire coverage has been removed entirely from a standard homeowners policy in the state. While insurers argue this flexibility may keep them operating in high-risk areas, experts caution that many homeowners may not fully realize what protections they are losing.
Increased Risk for Homeowners
Wildfires have become more frequent and severe every year, making fire coverage an essential part of home insurance, especially in high-risk regions. Areas such as Lake Tahoe and the eastern side of the Sierra Nevada Mountains are expected to be among the hardest hit by the new law.
There is growing concern that some homeowners may be unwilling or unable to pay extra for wildfire coverage. In the worst-case scenario, wildfire insurance could become scarce or disappear altogether in certain areas, leaving thousands of homeowners exposed to devastating financial losses if disaster strikes.
State data shows just how strained the market already is. In 2025 alone, policy cancellations and non-renewals linked to wildfire risk rose by 82%. Experts warn that homeowners who are already struggling to secure coverage may find it even harder under the new system.
Lawmakers Defend the Approach
Despite the concerns, state officials maintain that the new law is a necessary step. Supporters argue that without intervention, insurers might abandon high-risk regions entirely, leaving homeowners with no options at all.
The goal of the four-year sandbox is to test whether giving insurers more flexibility will keep coverage available, even if it comes with limitations. All sandbox policies will still require approval from regulators, and state officials say consumer protection remains a priority.
What Homeowners Should Do Now
With these changes on the horizon, homeowners are strongly encouraged to take a proactive approach:
- Read the fine print on existing and new insurance policies to understand exactly what is and isn’t covered.
- Confirm wildfire coverage, especially if you live in a high-risk area.
- Review mortgage agreements, as many lenders require adequate fire insurance.
- Ask questions before renewing or switching policies to avoid being underinsured.
Failing to fully understand policy changes could result in devastating out-of-pocket costs after a wildfire.
Building Toward a More Resilient Future
As we navigate this evolving home insurance landscape, it’s more important than ever to work with professionals who understand the market and advocate on your behalf. At DRO Insurance, we are working hard to ensure our network of insurers continues to fight for coverage solutions that keep homeowners protected, even as regulations and risks change.
While the insurance environment may be shifting, homeowners don’t have to face it alone. Staying informed, reviewing your coverage carefully, and partnering with a team committed to your protection can make all the difference in 2026.
Call us today. The team at DRO and our insurance partners are here to help you with any questions you might have.
Dayton Ritz + Osborne Insurance proudly serves the Hamptons area. Call today at 631-324-0420 or visit our website.