Wildfire Insurance Claims for Home and Business

Rubble and damages done by calamity
Assignment of Benefits (AOB) When Contractors Handle Claims
November 2, 2017
Rubble and damages done by calamity

Wildfires occur often in California. The latest example is from October 2017 – a month during which wildfires affected a large area in Wine Country. As a property or a business owner in this region, you need to have a good idea about your insurance and the degree of protection it provides.

Making a claim after the October fires or other natural disaster is the first step towards getting financial compensation for repairs and rebuilding. Because of widespread destruction, however, you will have to keep a couple of specifics in mind.

According to officials, the claim process could be slow for both home and business owners. Due to the big number of claims, insurance companies will find it difficult to meet reasonable deadlines and some delays are to be expected.

Wildfire Insurance Claims: An Overview

Most homeowner policies do feature coverage for wildfire damage. People who own a property in a high-risk area, however, would have had to get additional coverage or spend more on their policy.

Before getting started with the claim process, it’s crucial to take a look at the policy and see what’s covered. Typically, an insurance policy provides compensation for structural damages and destruction of the property itself.

The steps to follow when filing a wildfire insurance claim, whether it is for residential or commercial property, are going to be the same. Here’s the essential sequence of steps that policyholders have to have to go through:

  • Collect evidence: documenting all of the losses immediately after the damage has occurred is of paramount importance. Get to the property as soon as it is safe and use photo and video to gather sufficient evidence. It’s also a good idea to draft a list of all items/equipment that have been lost or damaged in the fire.
  • Contact the insurance company: when making a claim, you may want to support it with additional information like the date on which the loss occurred, the types and the scope of the damage, the location, whether any individuals were injured in the fire, an inventory list of all damaged or completely destroyed equipment and a statement pertaining to whether temporary repairs are necessary. If you’ve made temporary repairs, provide the insurance company with a receipt for those.
  • Meet with an insurance adjuster: the adjuster’s visit is important – make sure that they see the full scope of the damage.
  • Document the entire process: starting an insurance claim journal is a good idea. Document all interactions with the insurer and the adjuster. Include copies of all documents in your journal. Communicate new and important information as soon as it becomes available.
  • Get a written statement about exclusions and compensation caps: depending on the situation, the insurer may claim that certain types of damage are not covered by your policy. If this is the case, demand a written statement that explains how the estimate has been calculated and which types of damage have been excluded from it. Detailed reasoning about the exclusions will also have to be featured in the report.

The Alternatives

As already mentioned, people living or owning property in high risk areas (like canyons) may find it difficult to get insurance coverage for wildfire damage. In such instances, alternatives should be explored. A state-sponsored program called the California FAIR Plan is a viable option.

The program offers coverage for damage to commercial buildings, business premises and residential dwellings. There are certain submission guidelines that have to be met for coverage to be provided under the FAIR program. Coverage isn’t available for buildings that sustained damage prior to a wildfire, nor for vacant buildings and buildings that are in violation of federal or state laws.

Certain compensation limits are imposed under the FAIR program. For dwellings, the cap is 1.5 million dollars. For commercial policies, the cap is three million dollars for structures and 1.5 million dollars for all other coverages. The cap under a business owner policy is two million dollars for structures and one million dollars for the contents.

Wildfire Insurance Claims and Exceptions

Many North California wineries and businesses will find when making a claim that the coverage they’re entitled to may be limited by certain exceptions. Under typical insurance policies, crops are covered, but the same doesn’t apply to vines.

On top of the wildfire damage, wineries may suffer additional losses that are indirectly related to the natural disaster. Spoilage of production that results from a utility failure, for example, may come with much lower limits than other insurance policies.

A final factor to keep in mind is that the usual cost of repair and construction work/materials can be expected to increase in the aftermath of a disaster. The higher demand brings prices up, which could result in more expensive renovations – a factor that has to be considered when estimates are being made.

Insurance companies in California have a lot of experience with wildfire insurance claims and clients shouldn’t face serious problems when it comes to filing the claim. If you are dissatisfied with the process or the amount you’re being offered, remember that you can always also hire an experienced insurance law attorney to help you negotiate.

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