Front Light Insurance

The Role Insurance Plays In California Wildfire Recovery

In the aftermath of the historic wildfires that devastated California, we at Frontlight reaffirm our dedication to helping our clients when they need us most. But what role does insurance play in the state’s recovery?

Based in West Los Angeles, we have witnessed the tragic results of the wildfires firsthand, and are committed to helping individuals, families, and businesses during times of immense loss, confusion, and adversity such as these.

In Southern California, Malibu’s Woolsey Fire cost three people their lives, incinerating 96,949 acres and 1,643 structures, while, in Northern California, the Camp Fire in Butte County grew to become the deadliest in state history, costing at least 86 people their lives, consuming 153,336 acres and 18,804 structures and erasing the entire town of Paradise off the map. 

Together, the two fires destroyed countless homes and businesses. In a fire season that seemed to be never-ending, upwards of 1,600,000 acres have been destroyed in California to date.

The economic impact of the wildfires is staggering. Governor Jerry Brown stated that the fires would cost the state “tens of billions”of dollars. The insured losses could reach as much as $13 billionfrom property and auto loss, burn and smoke damage, business interruption, and living expenses.

Insurance and Rebuilding

But what role does insurance play in the recovery process? Most wonder: will this lead to a spike in future rates? Insurers are reacting to the losses, to be sure, but under California law, insurance companies must provide justifications for any rate increases they issue.

Catastrophic losses are averaged over 20-year spans to spread rate hikes out over time, but some insurance companies might refuse to issue new policies for homes and businesses in higher fire-risk areas, or even renew existing policies.

While that sounds worrisome, it also leaves room for surplus line carriers (insurance options who don’t have to file with the state of California) to provide those services and fill the coverage gaps in higher fire-risk areas.

For those looking to rebuild after this tragedy, several questions emerge: how long will it take to repair or build? Where can you live while the rebuilding takes place? What will be the total cost?

Sadly, disasters like these pose new questions most thought they’d never need to consider. The future of development in the state points toward lower fire-risk areas as premiums in higher-risk areas continue to rise.

What to Remember

The fires serve as a sobering reminder for homeowners, business owners, and other insureds to check, update, and renew their policies, and for prospective homebuyers to always check insurance rates before buying a home.

If your homeowner’s policy includes Loss of Use coverage, you’re entitled to living expenses if your home is deemed uninhabitable. This can cover travel expenses and moving costs as well.

However, these policies are limited to a specific term, meaning you might only get partial coverage for a set amount of time.

It’s important that policyholders know what they’re entitled to by their policy. Insureds should always check the terms of their Loss of Use coverage and keep track of all their receipts in case they need to be submitted to their insurer.

In January 2019, Loss of Use coverage in California was extended to 36 months “when a state of emergency has been declared if the policyholder acting in good faith and with reasonable diligence encounters delays in the reconstruction process beyond the policyholder’s control.  (SB 894, amending Insurance Code § 2051.5).”

While this may be enough time for most people to rebuild, others may find rebuilding in that time more challenging due to extenuating factors, like contractor availability.

The Frontlight Insurance Promise- 
Disasters are when people depend the most on their insurance. We know that, and we’re committed to providing you, our client, with the expert, comprehensive personal, business, and commercial coverage you need in times like these.

What matters to you, matters to us. We custom-tailor our policies to meet your requirements, always keeping your records organized and our terms simple to understand.

We’re committed to all our clients equally, whether big or small. We want you to know, that in dark times, you can trust in Frontlight!

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