Your Options after a Wildfire

Having your house, your business or your crops destroyed in a wildfire will cause some strain until you sort out a way to get over the disaster. While regrouping under such circumstances is very difficult, it’s important to act fast. Most homes are protected by insurances against wildfires and the same applies to commercial premises.

As an insurance policyholder, you’re entitled to a compensation for both structural destruction and damage of personal belongings. In the aftermath of a disaster like the Northern California wildfires of October 2017, however, you should be patient and meticulous. Many other people are submitting their claims at the same time, which could contribute to some delays.

The first thing you have to do is learn about your options. The following guide will acquaint you with the basics to make the process easier.

Your Insurance Policy

Most residential and commercial property insurance policies have provisions for coverage in the case of wildfires. People who live or work in high risk areas, however, could be subjected to different terms and conditions. These have to be specified in advance, otherwise the coverage will be limited or non-existent.

The first thing to do in the aftermath of the fire destruction is to check your policy. This way, you will know whether you’re entitled to coverage and if a certain limit applies to the amount that you’re going to get.

According to the Insurance Information Institute in California as quoted by New York Times, wildfires are covered under the same terms and conditions as domestic fires. Policyholders will also get coverage for smoke damage and water damage resulting from the efforts of firefighters.

Additional living expenses and business interruptions could also be covered in the case of a natural disaster. Once again, the specifics of your homeowner or business policy will have to be examined to determine whether you’re entitled to such compensation.

Typically, an insurance policy will provide coverage for rebuilding and repairs up to the insured amount. People who have an extended replacement cost coverage will get an additional percentage that depends on the contract specifics (anywhere between 25 and 50 percent, even higher in certain situations).

Home and business owners will also be required to come up with an inventory of damaged personal belongings, furnishings and equipment. The description of the item, its condition and life expectancy are to be included in the inventory list. It’s also a good idea to add some images as supporting evidence. Based on this information, the insurer will calculate the item’s depreciation from its original cost and the compensation that you will be entitled to.

Options for Property Owners in High Risk Areas

Properties located close to the canyons are considered high risk, and many insurance companies will refrain from providing the owner with coverage options.

Hybrid insurances are best for people in such situations. The homeowner may have a standard insurance policy for the property and California FAIR Plan coverage for fire damage. Such a combined approach should result in adequate compensation in the case of a wildfire.

The California FAIR Plan provides coverage as a last resort option for homeowners and business owners that have experienced some wildfire damage or destruction. The FAIR program can be used only after the property owner has exhausted all other options to get coverage from an insurance company.

Under FAIR’s terms, homeowners and commercial property owners can get financial assistance for damage caused by fire or lightning, smoke or an external explosion. For an additional premium, there are optional perils coverages, like extended coverage for various types of natural disaster and vandalism.

If there’s no replacement cost coverage chosen, the FAIR Plan comes with an Actual Cash Value policy. In the case of partial damage, the policy provides financial resources for the cost of repair and replacement. A deduction will be calculated for physical depreciation. In the case of total loss, the compensation will be calculated based on the fair market value of the construction on the basis of its condition immediately prior to the wildfires. A limit is specified in the policy and the amount can reach up to that cap, regardless of the loss type.

Additional Factors to Consider When Assessing Your Options

The cleanup and ensuring access to houses, business premises and vineyards after a wildfire can be a challenging process. According to officials in California, the government-sponsored cleanup and removal of hazardous materials after the fire will take months. Thus, you should be patient.

Currently, a suspension of tough zoning and planning is in full effect in Northern California for the purpose of speeding up rebuilding. There are additional challenges, however. For a start, experienced contractors have reported a shortage of enough skilled labor to take all of the calls and begin repairs. In addition, insurance claims can take a long time to process because there are thousands of policyholders seeking financial assistance.

The cost of materials can be expected to increase after the wildfire because of the high demand – it’s a simple matter of economic demand and supply. After Hurricanes Harvey and Irma, for example, the cost of structural wood panels skyrocketed.

Insurance companies have a lot of experience with natural disasters like wildfires. Thus, processing will be as fast as possible under such circumstances. One final thing to remember is that you have additional options if you are dissatisfied with the settlement process and the amount you’re being offered. You have legal rights that your attorney can help ensure are protected during the claims process.

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