Keep me updated!
When the flames subside and the smoke clears, California is left facing what experts now call the most expensive disaster in U.S. history. Beyond the heartbreaking loss of homes, businesses, and natural beauty, this catastrophe has unleashed a financial and insurance crisis that will ripple through every corner of the country.
Insurance expert Karl Susman, host of Insurance Hour, recently broke down how this disaster affects everyone—not just those in burned neighborhoods. His insights reveal an intricate web of consequences that connect wildfire losses to global insurance markets, supply chains, and even your household budget.
The Economic Ripple Effect Beyond the Fire Zones
At first glance, it’s easy to assume that wildfire victims are only those whose homes or vehicles were directly destroyed. But as Susman points out, the impact extends far beyond the fire zones.
When hundreds of homes and businesses in areas like Pacific Palisades are lost, so are the jobs that supported them. Pool cleaners, landscapers, home cleaners, construction crews, local grocers, and car wash attendants suddenly have no work.
This loss of income triggers a domino effect across California’s economy. Fewer paychecks mean reduced spending in other sectors, from restaurants to retail. Even people living hours away may feel the sting as local economies tighten and prices rise.
In short, everyone—from the small business owner in Los Angeles to the homeowner in Fresno—feels the shockwave of these fires.
Reinsurance and the Global Spread of Disaster Risk
Susman explains a concept most people rarely hear about but that directly affects their insurance bills: reinsurance.
Reinsurance is essentially “insurance for insurance companies.” It spreads financial risk so that when a massive catastrophe strikes—like California’s wildfires—no single carrier is financially wiped out.
These reinsurers operate globally. When billions are paid out for California losses, reinsurance premiums rise worldwide. Homeowners in Texas, New York, or Florida may see higher rates because of fires thousands of miles away.
This global interconnection means disasters are no longer just local tragedies—they are worldwide financial events that affect insurance pricing everywhere.
The Exploding Cost of Rebuilding After Wildfires
Once the fires stop, the next crisis begins: rebuilding. Construction resources immediately become scarce. Skilled labor, lumber, roofing materials, plumbing parts, and architectural services surge in demand.
Susman notes that after major wildfire events, rebuilding costs can soar to $1,000 per square foot, compared to pre-disaster costs of $300 to $400 per square foot. For many homeowners, even full insurance payouts may fall short of rebuilding the same home.
This construction inflation doesn’t only impact fire victims. It raises costs across the entire state. Even routine repairs, remodels, and contractor services become more expensive, affecting homeowners far from the burn zones.
What the California FAIR Plan Can and Cannot Do
For homeowners who cannot find coverage in the private market, California offers the FAIR Plan—Fair Access to Insurance Requirements—as a last-resort option.
The FAIR Plan provides basic fire coverage when traditional insurers decline to write policies. However, Susman warns that the system is under extreme strain due to record-breaking wildfire claims.
To fund these claims, the FAIR Plan issues mandatory financial “assessments” to private insurers based on their market share. Ironically, insurers who exited high-risk areas still help pay for the damage through these assessments.
While this structure ensures claims will eventually be paid, service challenges remain. Limited staffing and reliance on out-of-state adjusters can lead to delays, communication issues, and longer settlement timelines.
Keep me updated!
The Emotional Toll on Insurance Professionals and Adjusters
Behind every claim number is a personal tragedy—and that reality affects not only homeowners but also the professionals handling the claims.
Susman describes the emotional exhaustion that comes with guiding hundreds of clients through catastrophic loss. “It’s draining,” he says, “but this is why we’re here. This is the moment insurance is meant for.”
Adjusters often face burnout as well. Many are deployed from other states during catastrophe events and have handled multiple large disasters. Desensitization can occur as a survival mechanism, though it may feel frustrating to traumatized claimants.
Patience and clear communication are essential from both sides during the claims process.
How and When to File a Wildfire Insurance Claim
If your home has suffered wildfire damage—no matter how minor—Susman stresses that you should file your claim immediately.
“This is what insurance is for. This is go time,” he emphasizes.
Even smoke exposure and air quality contamination justify filing a claim. Insurers send professionals to assess environmental damage, testing air quality and structural integrity as part of covered services.
For uninsured homeowners, options are limited but still exist through FEMA grants and Small Business Administration (SBA) loans. These programs provide temporary assistance but rarely cover full rebuilding costs.
Susman also clarifies that bank force-placed insurance only protects the lender—not the homeowner. If your mortgage company added coverage for you, it will not rebuild your home after a fire.
Fraud and Scams in Disaster Zones
Unfortunately, disaster areas also attract scammers. Susman warns of widespread schemes ranging from fake FEMA messages to fraudulent contractors collecting deposits and disappearing.
Some impostors pose as insurance “helpers” or government agents, tricking victims into sharing personal information for identity theft.
His advice is clear: legitimate government agencies will never cold-call, text, or email you about disaster aid. Always start with verified resources such as insurance.ca.gov for official information.
Rebuilding Smarter and Reviewing Coverage After Disaster
Recovery will take years—financially, emotionally, and physically. But within the devastation lies an opportunity to rebuild with greater resilience.
Homeowners are now rethinking their coverage, ensuring protection not only for wildfire but also for earthquake, flood, and loss of use. Annual policy reviews, accurate dwelling limits, and proper endorsements are becoming essential.
As Susman reminds consumers, “Insurance isn’t about what’s likely to happen—it’s about what could happen.”
A Call for Collective Resilience in the Face of Catastrophe
California’s wildfire catastrophe is more than a regional emergency—it is a national wake-up call. From global reinsurance markets to local construction crews, every layer of the economy feels its aftershocks.
Preparedness is no longer optional. Through stronger policies, better infrastructure, and informed decision-making, resilience must become a shared responsibility.
As Karl Susman puts it, “Everyone needs to step up and do what’s right—to help people, help the city, help the state, help the country—because we’re all connected in recovery.”
Keep me updated!
