Insurance Expert Karl Susman on Wildfire Claims, Market Impact & Scams
Published Date: 01/12/2025
As California faces yet another catastrophic wildfire season, thousands of families are dealing with the devastating loss of homes, communities, and stability. But beyond the flames lies a quieter crisis — an insurance market under severe strain, where coverage gaps, market withdrawals, and fraudulent practices add another layer of difficulty to recovery.
In a recent CBS News interview, insurance expert Karl Susman, president of Susman Insurance Services, joined from Southern California to explain how these overlapping crises are reshaping both the insurance landscape and the recovery process. His insights offered a clear-eyed look at what homeowners can expect as they file claims, seek temporary housing, and navigate the uncertain months ahead.
1. Wildfire Claims: A Catastrophe of Unprecedented Scale
Susman began by describing the sheer magnitude of the current wildfire disaster, which he called “unprecedented 24 hours after it began.”
With containment hovering around 11% for the Palisades Fire, the number of insurance claims was already skyrocketing.
“We already have claims being filed, but a lot of people haven’t even been able to file yet because they’re evacuated and don’t know if their homes are still standing,” Susman said. “We’re going to see the number of claims continue to rise as time goes by.”
Experts estimate that total wildfire-related claims from this season could reach tens of billions of dollars, a figure that reflects both the growing severity of natural disasters and the vulnerability of California’s insurance system.
2. A Crisis Within a Crisis: The State of California’s Insurance Market
Even before the Palisades Fire ignited, California’s insurance industry was already in turmoil.
For years, major carriers such as State Farm and Allstate have been scaling back their exposure, citing unmanageable wildfire risks and an outdated regulatory system under Proposition 103, which restricts rate adjustments.
“We saw people’s insurance policies canceled even before this fire,” the CBS anchor noted, setting the stage for Susman’s analysis.
Susman acknowledged that the fires have only compounded an existing insurance crisis — one in which availability, affordability, and consumer confidence are all eroding.
However, there is some hope on the horizon: the Sustainable Insurance Strategy, enacted just weeks before the fires, could mark a turning point.
“Fortunately, all of the new regulations went into effect in December—literally less than a week before the fire started,” Susman said.
“So we have a path forward. Carriers will have to write some big checks, but now they can properly underwrite and start rebuilding a sustainable market.”
These reforms allow insurers to use forward-looking catastrophe models, which better account for changing climate conditions, and require them to write coverage across the state—not just in low-risk areas.
It’s an essential evolution for an industry struggling to balance solvency with consumer protection.
3. Mandatory Moratorium: A Lifeline for Non-Renewed Homeowners
One of the most immediate measures protecting homeowners comes from the California Insurance Commissioner, who issued a one-year moratorium on policy cancellations and non-renewals in and around active wildfire zones.
Susman broke down what that means for affected residents:
“In the Palisades alone, State Farm non-renewed 1,626 individual policies. It was the second-highest area for non-renewals in the state. All of those people had to find new coverage elsewhere — in a market that was already incredibly difficult.”
The moratorium temporarily halts those cancellations, ensuring that families won’t lose their insurance coverage while trying to rebuild.
Many of the displaced policyholders have since moved to the California FAIR Plan, the state’s insurer of last resort, while others secured coverage through non-admitted or regional carriers.
“Hopefully they’re now with financially stable companies,” Susman said. “If they’re with an admitted carrier, they have the protection of the California Insurance Guarantee Association. If they’re with the FAIR Plan, they’re backed by all admitted insurers in the state.”
This complex system provides at least a short-term safety net — but it’s a reminder that California’s private insurance market remains fragile.
4. Understanding Fire Coverage: What Most Homeowners Don’t Realize
One of the most common—and dangerous—misconceptions Susman encounters is that fire coverage is optional.
“We had a man tell a reporter he wasn’t sure if he had fire insurance,” Susman said. “People get so overwhelmed in the home-buying process that they don’t look closely at what’s in their policy until something like this happens.”
The good news: fire coverage is built into virtually every homeowners, condo, or renters policy.
“Fire is what we call a primary coverage,” Susman explained. “It’s included by default in homeowners insurance, and other perils—like theft or water damage—get stacked on top. Unless you went out of your way to exclude fire, which would never happen with a mortgage, you have it.”
That assurance is crucial for thousands of families now facing the loss of their homes.
Homeowners who suffer total losses can generally expect insurers to pay up to their policy limits, designed to cover full rebuilding costs.
“If the policy was written properly, there should be sufficient coverage,” Susman said. “The only out-of-pocket expense should be your deductible.”
However, as previous fires have shown, underinsurance remains a chronic problem for many Californians whose coverage limits haven’t kept pace with construction inflation.
5. Post-Disaster Scams: Protecting the Vulnerable
As in every major disaster, the aftermath of the wildfires has attracted not just contractors and insurers—but scammers.
Susman emphasized that consumer protection is just as important as physical recovery.
“There’s a fine line between scamming and gouging,” he warned. “People looking for temporary housing are being told by landlords, ‘Give us your best and final offer.’ That’s illegal.”
He pointed to California Penal Code Section 396, which caps rent increases in disaster-declared areas to 10% above pre-disaster levels.
“If you’re told otherwise, remind them that what they’re doing is against the law,” Susman said. “That might be enough to get them back in line.”
Beyond rental price gouging, Susman cautioned residents to be wary of:
- Unlicensed contractors soliciting repair jobs.
- Fake FEMA or insurance adjusters requesting personal information.
- Pressure tactics demanding upfront payments.
“Unfortunately, scams are a major part of the story after every disaster,” he said. “If it sounds too good to be true—or if they demand cash on the spot—walk away.”
6. The Rebuilding Opportunity: A Chance to Do It Smarter
Despite the devastation, Susman sees an opportunity to rebuild California communities more safely and sustainably.
“As horrible as this is, I’d like to think the homes will be rebuilt to the most up-to-date building codes,” he said.
“We’re going to learn a lot about why some homes survive while others don’t, and that’s going to shape how we build going forward.”
Fire-resistant roofing, ember-resistant vents, and defensible space landscaping are now standard components of California’s “Safer from Wildfires” regulations, which insurers are beginning to recognize through mitigation discounts.
Susman believes these initiatives—combined with updated underwriting models—could eventually reduce long-term risk and help stabilize the market.
7. Lessons for Homeowners: What To Do Before and After a Wildfire
From his perspective as both a broker and an educator, Susman offered clear, actionable guidance for homeowners navigating wildfire risk:
Before the Fire:
- Review your policy annually. Confirm coverage limits reflect current rebuilding costs.
- Document your property. Take photos and videos of every room for easier claims processing.
- Clear defensible space. Maintain 100 feet of clearance around your home and install fire-resistant materials.
- Know your evacuation plan. Have a go-bag ready with key documents, medications, and insurance contacts.
After the Fire:
- File your claim early. Don’t wait for official damage assessments to start the process.
- Keep receipts. Additional living expenses (hotels, meals, transportation) are often reimbursable.
- Beware of fraud. Verify contractor licenses and never sign blank insurance forms.
- Lean on your broker. They can advocate for you and coordinate directly with adjusters.
“It’s horrible, no question,” Susman said, “but this is exactly why you have insurance. It’s the proving ground.”
8. The Path Forward: A Market in Transition
While insurers will face record payouts in the months ahead, Susman remains optimistic that California’s new insurance framework will gradually restore confidence to the market.
“It’s going to take time, but at least now there’s a structure for carriers to properly underwrite and remain in the state,” he said.
If successful, the combination of stronger building codes, consumer protections, and updated pricing models could help ensure that coverage remains available—even in high-risk zones.
Still, he warned, homeowners shouldn’t expect an immediate fix.
“Insurers are going to have to write some big checks,” he said. “But rebuilding smarter, not just faster, is the only sustainable path forward.”
Conclusion: Rebuilding Trust, One Home at a Time
California’s wildfires have once again exposed the fragility of both the environment and the insurance system designed to protect it.
But as Karl Susman’s interview made clear, resilience begins with understanding — understanding what your policy covers, what laws protect you, and what steps to take before disaster strikes.
While the flames will eventually die out, the lessons they leave behind must endure.
And as the state rebuilds—home by home, policy by policy—the goal isn’t just recovery.
It’s reinvention: a California better prepared for the next fire, and a system ready to stand behind those who call it home.
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