Insurance Resources

General Advice

Homeowners:
1. File an insurance claim promptly and document all damage before cleanup begins (if possible).

Insurance companies are required to immediately pay at least one-third of the estimated value of your personal belongings and a minimum of four months of rent for total loss cases under a state-declared emergency.

2. Maintain a recovery diary and detailed written or email records of interactions with insurance adjusters.

Take photos (ideally before debris cleanup occurs).
Keep paperwork and documentation organized.
Keep a log of interactions with your insurance companies and try to have emails/something in writing to refer to later down the line.

3. Hold onto receipts/proof of payment for temporary housing expenses

Per insurance.com, many standard home insurance policies include this limited coverage, called “Loss of Use” coverage. Refer to your specific policy for details and to determine your coverage amount so that you can be reimbursed.

4. Avoid settling claims hastily and consider hiring a public adjuster if needed.

Getting a second opinion from a construction professional before settling may be a good idea (if possible).
It is easy to want to sign and settle claims immediately due to the immense amounts of stress, but taking the time necessary to complete the process is well worth it.

5. Costs of bringing the replacement building up to the new construction code requirements are called “code-required upgrades”, and these “code bucket” items may have to be negotiated and can take longer to be reimbursed. Your builder should keep a detailed list of these code-related upgrades, and you should take pictures of them as they are done.

6. Because the Los Angeles area fires are a declared “disaster”, policy coverage should double. Some insurance companies will not volunteer this information. Be sure to ask your claim rep about this.

7. Some insurance companies will hire “forensic adjusters” to review your builder’s bid and invoices closely to see what costs they can exclude or reduce. Be sure to keep every receipt.

Renters:
1. Renters’ insurance typically covers belongings and temporary housing.

2. Any damage and insurance claims to the structure itself is the responsibility of the landlord.

Business Owners:
1. File claims for commercial property, lost income, and relocation costs.

You’ll either be provided with a “proof of loss” form or a time for an adjuster to survey the damage to the property.

2. Document damage and ongoing business expenses for potential reimbursement.

Keep documentation and receipts of expenses well organized.

3. Business interruption coverage may help cover lost revenue.

Collect any proof of income that your business was generating prior to the damage (tax returns, financial statements, etc.).

Establish Your House Value Now:
Document your home’s value now by going to https://www.zillow.com/ or https://www.redfin.com/.

Use a Private Adjuster If Necessary:

You do not need to just accept your insurance company’s adjuster’s value if you believe it is wrong. There are private adjusters who can help substantiate any claim for more than what your insurance company is willing to pay. But wait until you have the insurance company’s estimate first. You may not need to contest it, and hiring a private adjuster will cost money.

California Department of Insurance Consumer Complaint site
https://www.insurance.ca.gov/01-consumers/101-help/.

A Brief Primer On Insurance Coverage

(Drawn from the 1/16/25 Eaton Fire Town Hall Meeting)

1. The courts recognize that people buy insurance to NOT use it (peace of mind).

Insurer has a duty to give as much consideration to the interests of the insured AS ITS OWN.
They cannot solely focus on the facts which justify denial of a claim and ignore evidence which supports payment.
Duty for insurance company to act in good faith.

2. Homeowners insurance is “First Party Coverage.”

Losses suffered directly by the insured (you).
Company promises to pay money to you upon the occurrence of an insured loss (peril).
In CA, the peril of fire is almost always covered. However, it is still worth reviewing the policy for which perils may NOT be covered (again, fire is essentially always covered in CA).

3. Coverage Provisions

Coverage A – “Dwelling”
- - Insures the residence.
  - If a garage is attached to the home, it is typically considered part of the dwelling.
Coverage B – “Other Structures.”
- - Detached garages, guest houses, etc.
Coverage C – “Personal Property.”
- - Personal items within your home or other structures.
Coverage D – “Loss of Use.”
- - “ALE” – Additional Living Expenses.
    - Any expenses incurred during period of repair/replacement.
  - “Fair Rental Value.”
    - Rental value of residence by looking at comparative residences.
Coverage – “Code Upgrade/Ordinance & Law.”
- - Older homes that may require code upgrades.
  - If you have this type of coverage, need to make sure these upgrade line items are attributed to this coverage and NOT Coverage A, to maximize your coverage.
Coverage – “Trees and Shrubs.”
Coverage – “Debris Removal”

4. Coverage A Types:

Replacement Cost Coverage.
Guaranteed Replacement Cost (now uncommon).
- - Guaranteed replacement of the structure.
  - Full cost to repair, replace/rebuilt, irrespective of policy limits.
Extended Replacement Cost (now most common).
- - Policy limit PLUS an extension.
    - Extension is typically 25-50%.
  - Example: $1million policy limit, 50% extension ($1.5m)… $500k “extended” policy limit.
    - If it says “100% extension/extended policy, it is still an extended replacement cost policy but with a 100% EXTENSION of the policy limit.”
  - The “guarantee” is gone, still a finite limit.
  - This extension is more so intended for unknown variables (cost of construction, everyone else rebuilding their homes causing higher demand, etc.).
Replacement Cost (less common)
- - - Replacement cost provides just cost to repair.
In your policy, you will see a list of boxes and the specific box with what type of coverage you have WILL BE CHECKED, review your policy to determine which of the policies above you have.

5. What if you don’t want to rebuild but rather relocate?

An insured homeowner can recover the full replacement cost benefits under the policy and purchase a replacement dwelling at another location.
You can also purchase another property at another location.
However, the coverage amount for rebuilding vs moving/purchasing another property may vary, check your policy.

6. If you are unsure whether you will rebuild or move, still tell your insurance carrier that you intend to rebuild. This keeps your options open, and you can always change your mind.

Telling the insurance company you intent to move may impact your discussions regarding coverage amounts in the future.

7. Are you underinsured?

8. If the insurance company does not give you an estimate of the cost to repair/rebuild and just says they’ll pay you the max, this is a red flag.

Essentially if the cost is greater than limit, it’s an admission by them that you’re underinsured.
Ask questions to your adjuster IN WRITING (email).
General Rule: An insurance agent does NOT have an obligation to volunteer to a homeowner that they should buy additional or difference insurance coverage.
- - EXCEPTIONS:
    - Agent misrepresents the nature, extent, or scope of the coverage.
    - There is a request/inquiry by the insured for a particular type of coverage.
    - Essentially, if a homeowner asks for help on how much coverage they should have OR if their agent assumes to have expertise/recommends an amount of coverage and IT PROVES TO BE INSUFFICIENT, there may be room to get more coverage because you were misled in a sense.
The insurance companies are required by law to at least annually confirm that their estimates/methods to estimate property damage/property value is up to date.
Any reduction in limits or elimination of any sort of benefit requires a 45 day notice as a SEPARATE notification.

9. Claims Handling Issues

Get an accurate “Scope of Loss.”
- - Itemization of all that needs to be done to repair or replace.
  - You should still get your own scope of loss. This is to determine if you are underinsured AND what the true cost to fix is.
  - Insurance industry has historically undervalued the scope and cost of repair.
  - Expect delays. There will be a large number of claims submitted in a short period of time, which will make it difficult process them in the “typical time frames.” In other disasters, it was not uncommon to find claims still opened 3+ years after the loss.

10. Statutory Requirement In A State Of Emergency

ALE (additional living expenses): in the event of a total loss, the insurer shall advance at least 4 months of ALE benefits **UPON REQUEST**
Personal Property: in the event of a total loss, if the dwelling was furnished, the insurer shall offer a payment of 30% of the policy limit applicable to the covered dwelling structure (Coverage A) up to a maximum of $250k WITHOUT REQUIRING AN ITEMIZED LIST OF WHAT YOU LOST.
- - You still have to make this itemized list, but this is to get it done quicker.
  - This 30% is applied to the dwelling limits, but goes towards the personal property bucket.
Dwelling: in the event of a covered loss (not only a total loss), the insured shall be permitted to combine their primary dwelling and other structure limits toward the rebuilding or replacement of the primary dwelling if the primary dwelling limits are insufficient to rebuild/replace thee primary dwelling.
- - Essentially, you are able to apply Coverage limits from Coverage B, Coverage C, etc. TOWARDS your Coverage A limit.
    - If you don’t have a guest house, garage, other structures etc. you can use that coverage towards your Coverage A.

11. Contractual Limitations Period

“Suit Against Us” provision usually exist, imposing a limitation period of 1 year from the date of loss. This clock stops when you submit a claim and are waiting for an adjuster.

12. Pay Attention to Coverage D – Loss of Use

ALE vs. Fair Rental Value
- - ALE means you are entitled to receive reimbursement for those living expenses that would otherwise not have been incurred had the loss not happened.
  - Fair Rental Value means you are entitled to the rental value of your residence by looking at comparative rentals in a given area.

13. Coverage C (“Personal Property” Issues)

Identify the total contents lost with as much specificity as possible.
Mentally, open every drawer in every room step by step.
Use photos and videos to help.
Use past statements to look up history of purchases (bank, credit card, amazon, digital receipts)

14. General Notes/Tips:

Get a complete copy of the policy, not just the declaration/first few pages.
Organize with your neighbors to form “carrier-specific” groups.
Take pictures and video of all damage to your property.
Keep a daily journal or everything that has occurred/every conversation with your insurance company.
You are not required to sign a release in order to receive benefits under your policy.

15. Claim Decision

Upon receiving proof of a claim, every insurer shall immediately, but in no event more than forty (40) calendar days, accept or deny the claim.
If you have already received some sort of benefits, that is essentially accepting the claim.

16. California FAIR Plan

Essentially a “last resort” insurance program for homeowners unable to obtain fire coverage with another insurance company.
Actual cash value coverage is less than replacement cost coverage in essentially all scenarios.

Additional Insurance Resources

Workshops or Webinars Available

California CA State Insurance Commissioner will host an Insurance Support Workshop to help those affected by the wildfires to understand insurance policies and resources available during recovery.

Pasadena City College
Saturday, January 25 at 10am – 5pm.
Sunday, January 26 10am – 1pm.

One-on-one appointments are also available, to reserve a one-on-one appointment, call (800) 927-4357

There’s also a Consumer Hotline at (800) 927-4357 for people who can’t make it to in-person events (like the one above) during normal business hours to ask any insurance-related questions-no need to wait for a workshop or attend in person

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