Siding (cladding) is an important esthetic attribute for houses, but it also has a key role as part of a protective enclosure to help shed rain, while permitting excessive vapor to move through and out of the house, as shown in the photo below.

Combustible siding provides a rapid vertical path for flames to reach vulnerable portions of a house such as the eaves or windows.
In a fire test, burn-through (through siding and sheathing) did not occur for the shingle siding below, but the fire spread vertically and quickly penetrated the soffit, which was 1/4-inch plywood. Even 1-inch solid wood is inadequate as a soffit material because of the edge gaps, unless it is tongue and groove.

Keep in mind that combustible siding needs a source of ignition. In many cases that will be caused by plants near the house, or from other combustibles, such as firewood.
Another potential problem with combustible siding is decay at the bottom edge caused by wetting in contact with soil, concrete, or exposure to lawn sprinklers (See Appendix F: Wood decay for more information on decay).

In the first diagram of the outside wall, note that it has an open "drainage plane" behind the cladding (siding). While this form of construction has been shown to be effective for drainage of water that gets behind the siding, it has been shown to be a problem if fire enters the cavity below or through the siding.
Some plastic siding deforms with heat and can expose the sheathing or the wall cavity to fire.

Tests conducted by the University of California Forest Products Laboratory have shown that siding without sheathing (both combustible and non-combustible) ultimately fails by burning through laps or conduction of heat to the studs. However, the presence of sheathing (plywood or OSB) largely prevents failure. The type of lap is also very important; the plain bevel siding (on the left below) failed in just over one minute, but the rabbet bevel siding (on the right) lasted over 21 minutes.
The relationship observed with horizontal lap siding would also apply to vertically lapped products, such as T1-11-type panel products and board-and-batten siding. A more complicated joint is preferable from a flame entry perspective. Panel products can have a butt-joint covered with a sealant, or with 'batten' cover, or have a more complicated joint. Board-and-batten consist of a number of wood-to-wood joints similar to plain bevel, and so flame penetration into the stud cavity would occur more easily In these cases.


All lapped wood siding should have an interlocking type of lap (such as the rabbet bevel shown above) to prevent flame penetration. If you have combustible siding, carefully inspect it annually for gaps and make sure that they are filled with a high-quality caulk.
A possible solution to the soffit problem (with boxed eaves) is to replace it with cement board that is properly filled with fire-resistant material at all joints.
For buildings that are 2-story, there is a real opportunity to break up the vertical combustion path with a non-combustible first-story:

If you do replace your siding, consider several other options to improve your fire, seismic, and durability performance:
Add structural sheathing (plywood or OSB) to improve both your fire and earthquake resistance. To find the earthquake hazard rating for your area, go to:http://www.consrv.ca.gov/cgs/rghm/ap/index.htm.Have your sill plates (the lumber that is fastened to the foundation) inspected to see if they need upgraded holddowns (again for seismic protection).
If you reinstall your windows, make sure that they are properly flashed to prevent leaking and subsequent decay. Also, think about potential upgrades for more fire-resistant windows (see the section on Windows for more information).