The recent Eaton Fire and Palisades Fire caused 29 reported deaths and left thousands of Southern Californians grappling with the loss of their homes, possessions, businesses, and sense of stability. In total, more than 12,000 structures were destroyed by these two wildfires alone. To those affected by these disasters, we at Matthews & Associates extend our deepest condolences. No one should have to face such devastation and its aftermath alone, which is why we’d like to share some information about the property insurance claim process that now lies before you, and how you can protect your rights if the insurance company doesn’t properly handle your claim.
(The majority of the structures destroyed by the Eaton Fire in Altadena and Palisades Fire in Pacific Palisades were homes, so we will focus on homeowners insurance policies.)
Understanding Insurance Coverage After a Disaster
A standard homeowners insurance policy typically covers property damage caused by wildfires. You’ll want to familiarize yourself with your policy to see if you have coverage, such as dwelling coverage (protection for your home’s structure), personal property coverage (protection for belongings inside your home), and additional living expenses (coverage for temporary housing and other costs while your home is being repaired).
Keep in mind that policies have coverage limits and exclusions. Furthermore, State Farm General Insurance Company has been highly scrutinized after it was revealed that the company ceased coverage for thousands of fire insurance policies held by people in Southern California shortly before the Eaton Fire and Palisades Fire broke out. The insurer has been accused of intentionally dropping policies before the Santa Ana winds began in the region; the seasonal winds are often linked to some of the worst wildfires in SoCal. It is always advised to review your insurance policy often and immediately tend to any requests they make.
Costs of Rebuilding After a Wildfire
Rebuilding after a wildfire is expensive. Beyond the cost of materials and labor, homeowners face additional expenses such as demolition, debris removal, and permits. The average cost of rebuilding a home varies widely depending on its size, location, and level of damage, but construction costs in Southern California have risen sharply in recent years due to inflation and supply chain shortages.
Temporary housing is another significant financial burden, as many policyholders must find accommodations while their properties are being rebuilt. The added costs of temporary housing can strain even the most comprehensive insurance coverage.
How Do You Request Funds from an Insurance Company?
The property damage claims process typically follows these basic steps:
- Contacting the insurance company: You will need to initiate contact with the insurance company to report that your property was damaged. This call officially begins the claims process.
- Detail the damage: The insurance company needs evidence of the damage, so you will need to explain what happened and start to gather documentation and photographs.
- Filing a claim: You will need to submit your claim to your insurance company with detailed documentation of the damage (photos, videos, and repair/replacement estimates).
- Claim evaluation: An adjuster, often hired by your insurer, should soon visit your property to assess the damage to determine the cost of repairs or rebuilding, as well as the extent of your coverage.
- Payout approval: If the claim is approved, the insurance company will issue payouts, which may include an advance payment for immediate needs, reimbursement for additional living expenses, and funds for repairs (often paid in installments as the work progresses).
- Review the settlement offer: Before you sign anything, even if it looks like your property damage claim will be approved, you should review the settlement offer. Bring it to an attorney from Matthews & Associates if you need help reviewing the offer for fairness.
(You can get more information about your rights when filing a residential property damage insurance claim by clicking here and visiting the official website of the California Department of Insurance.)
How Do Insurance Companies Pay for Rebuilding?
If the insurance company agrees to pay for a rebuild, it will usually offer a settlement amount based on either of the following:
- Replacement Cost Value (RCV): A settlement that covers the Replacement Cost Value allows for the full cost of replacing the destroyed property with similar materials, even if the original materials were in older or in worse condition.
- Actual Cash Value (ACV): A settlement that covers the Actual Cash Value considers how the property’s value might have depreciated with time, so the amount given to a policyholder will likely be less than what they might need to fully rebuild.
However, delays, disputes over repair costs, and withholding of “depreciation holdbacks” can slow the payout process and leave homeowners in financial limbo. Many policyholders find themselves underpaid for the actual cost of rebuilding when the final payout check is cashed, especially if an ACV settlement is used. Of course, policy limits and deductibles also need to be taken into consideration, which can further reduce the compensation total that a policyholder might have expected.
Insurance Bad Faith After a Wildfire
Unfortunately, after any disaster, like a wildfire or otherwise, many homeowners encounter challenges when filing a property damage insurance claim, such as claim delays, unexplained denials, or lowball offers for their losses. While such actions from insurance companies aren’t always intentional, in many cases, they are caused by bad faith. Insurance bad faith occurs when an insurance company intentionally fails to meet its contractual obligations to handle claims promptly and fairly.
Insurance companies are businesses that need to make a profit to stay open. When thousands of policyholders need to file individual property damage claims all at once due to one disaster like a wildfire, it would be significantly costly to the insurance company to approve payouts for all those policies in a short amount of time. For this reason, some insurance companies may resort to insurance bad faith tactics as a dishonest way to protect profits, even though it means harming people in need.
How an Attorney Can Help You
Going through the process of filing a property damage insurance claim alone can be exhausting, especially when you are already dealing with the emotional and mental toll of a wildfire. An experienced attorney can help you get everything under control and start feeling better about your future by managing communications with the insurance company, reviewing your policy, disputing underpaid or denied claims, and attempting to negotiate for full and fair compensation.
If bad faith is suspected, your attorney can talk to you about pursuing legal action on your behalf through a lawsuit. Insurance companies have a team of adjusters, lawyers, and claim experts who will fight your lawsuit, so having your own legal professional leading the way is highly recommended.
Steps Homeowners Should Take to Protect Their Rights
If you’re filing a property damage claim, important steps to protect yourself throughout the process include:
- Document everything, including photos of the damage, receipts for emergency expenses, and written communication with your insurer.
- Keep organized records of all conversations, emails, and letters.
- Don’t sign any agreements or waivers without fully understanding the terms—seek legal advice if needed.
- Reach out to an attorney right away if your claim is undervalued, delayed, or denied, or if you suspect bad faith practices.
Choose Matthews & Associates for Compassionate & Driven Counsel
At Matthews & Associates, our trial attorneys understand the unique challenges that Southern California homeowners face when trying to recover from wildfires. Our team is currently hearing from people who were affected by the Palisades Fire and Eaton Fire, including those who need help holding their insurance companies accountable when they fail to deliver on their policies and promises. With years of experience in complex litigation and lawsuits filed against major insurance companies, our firm has earned a reputation for providing compassionate and effective counsel that gives each client individual attention. We are committed to fighting for the compensation and coverage you deserve while treating you with the empathy and respect you need during such a difficult time.
We are here to help you rebuild, recover, and move forward—one step at a time. Call (888) 923-7001 or use an online contact form if you need our help.
Resources for Wildfire Survivors
If you need immediate help after a wildfire destroyed your property, you might be able to use these resources:
