Do you have Pet Pal? Do you remember, what he said? You are supposed to be his SHIELD! You are supposed to protect him at all cost, shield. So it does make sense for him keeping near you, you would keep close to your shield most the time, wouldn't you? It's your fault, that you fight inside a flame field. Yes, you have armor and high vitality and whatnot, but you will still take damage anyway, so will the poor squirrel. Make your main character a ranged one and keep higher ground to protect the brave rodent as well. Problem solved. Or cast Bless on the fire, or do other stuff, but don't complain, that while you keep fighting in fire, your squirrel is dieing.