Navigating the insurance process after LA wildfires

We understand how overwhelming it can be to navigate the insurance process while starting the road to recovery after the wildfires. This guide provides practical tips and resources to help LA homeowners take the crucial first steps, from filing claims to understanding their policy coverage.

What’s included in this article:

• Kicking off the insurance process
• Tips for reaching out to your insurance broker or agent
• Tips for reviewing your policy

Kicking off the insurance process

Start by filing a claim with your insurer online or via phone and requesting a full copy of your policy, not just the declaration page. In California, your insurer must:

• Answer your questions and reply to you immediately, but in no event more than 15 calendar days.
• Produce a copy of your claim-related documents within 15 days.
• Provide you with a complete copy of your policy within 30 days.

Tips for reaching out to your insurance broker or agent

• Be patient, but persistent. Insurers will likely be overwhelmed. Expect delays and be prepared to call repeatedly (even daily, if necessary) to ensure your claim gets the attention it needs.
• Document everything. Keep detailed notes of every interaction with your insurer to prevent future disputes. We recommend either communicating in writing or sending follow-up emails that include dates, times, the names of representatives, and a summary of the discussion.

Tips for reviewing your policy

Carefully review your full policy to understand the scope of your coverage, and consult directly with your insurance broker for clarification on any terms or conditions you’re unsure about. Important details to focus on include:

How your policy addresses different types of losses:

These include:

Dwelling: Covers the cost to rebuild or repair the physical structure of your home, including major components like walls, roof, foundation, and built-in appliances. Depending on your policy, the insurer will cover either the Replacement Cost Value (RCV) or Actual Cash Value (ACV) of your home, up to your policy limit.

1. Replacement Cost Value (RCV): Pays the full cost to repair or replace damaged property with new materials of similar kind and quality, without factoring in depreciation. For example, if your home used plaster walls, the insurer would pay to replace it with plaster (up to your policy limit), rather than cheaper materials like drywall unless you agree otherwise.
2. Actual Cash Value (ACV): Pays the depreciated value of your property at the time of loss, accounting for age, wear, and tear. The payout is typically much lower than RCV because it reflects the value of the materials and condition of the property just before the loss, not the full cost of replacement.
3. Policy limit: This is the maximum amount the insurer will pay for damages under the main portion of the policy, even if the estimated RCV or ACV exceeds this amount.

Personal property: Covers the replacement or repair of your belongings (e.g., furniture, clothing, electronics) and is often capped as a percentage of the dwelling coverage (typically 50-70%). Check if your policy covers ACV or RCV for personal property and consider compiling a room-by-room list of items, including estimated values and receipts.

Additional living expenses (ALE): Covers temporary housing, meals, and other costs incurred if you can’t live in your home during repairs. Be sure to understand any time limits or caps on this coverage, which are often defined as a percentage of the dwelling limit (typically 20-30%).

Detached structures. Covers structures like sheds or detached garages, often capped as a percentage of the dwelling limit (typically 10%).

Extended coverage: Some policies include extra coverage (e.g., 10-25% of dwelling coverage) for additional expenses that exceed the policy limit, such as price increases due to inflation, debris removal, or unforeseen rebuilding costs.

Building code upgrades: Covers extra costs required to rebuild your home to meet updated building codes. This is usually a percentage of the dwelling coverage (e.g., 10%).

Debris Removal Costs: These are sometimes covered as part of the dwelling limit, but if the dwelling limit is exceeded additional coverage may apply. 

Exclusions and Limitations:

Carefully review any exclusions or limitations in your policy.

Note: Wildfire damage is generally covered by standard policies but you should review for confirmation.

Deductibles:

Check your policy deductible, as this is the amount you must pay out-of-pocket before insurance coverage kicks in. Wildfire damage may fall under a specific deductible category in your policy.

Deadlines for filing claims:

Check your policy for the applicable deadline to avoid jeopardizing your claim.

Advance payment options:

Ask your insurer about advance payments for immediate needs like housing, clothing, and food, as these can help with urgent costs while your claim is being processed.

Note: under California law, after an officially declared disaster, your insurer is required to give you an advance of no less than 30% of your “dwelling” insurance limit and at least 4 months of your available coverage for temporary rent and other additional living expenses you incur due to having lost the use of your home.

Settlement options:

You should review the settlement options available under your policy and understand their impact on the payout. Depending on your policy, you may have the option to:

• Use the settlement amount to rebuild your home on the same lot.
• Use the settlement amount to buy an existing property instead of rebuilding.
• Choose a cash settlement, which may be less than the cost of rebuilding or purchasing a new home.

Additional insurance policies:

If your home was under construction at the time of the wildfire, you should verify whether you had Course of Construction or Builder’s Risk Insurance for additional coverage.

Disclaimer:
The information and resource links provided on this website are intended for general informational purposes only and do not constitute legal advice. While efforts have been made to ensure the accuracy of the information, it is not guaranteed to be complete, up-to-date, or applicable to your specific situation. This website is not operated by a licensed attorney, and the information provided should not be relied upon as a substitute for professional legal advice.