Insurance Tips for Homeowners Impacted by Fire

Published Date: 01/09/2025

Insurance Tips for Homeowners Impacted by Fire: Navigating the Claims Process and the Road to Recovery

The images are heartbreaking — entire neighborhoods reduced to ash, streets unrecognizable, and families standing before the remnants of homes that once held decades of memories. As wildfires continue to tear through Southern California, insurance concerns have quickly become one of the most pressing issues for displaced homeowners.

During a recent Insurance Hour appearance, insurance expert Karl Susman — himself among those evacuated — shared critical insights on how victims can take control of their recovery, even amid the chaos. His advice, grounded in decades of industry experience, helps demystify the insurance claims process and offers a roadmap for homeowners facing the overwhelming aftermath of wildfire loss.

1. First, Take a Breath — Then File the Claim

“The very first thing I tell everyone,” said Susman, “is to stop, take a deep breath, and exhale.”

It’s simple but profound advice. When your home is gone or your future uncertain, the natural reaction is panic. But Susman reminded listeners that the purpose of insurance — the reason we pay those premiums month after month — is precisely for moments like this.

“What’s most important right now is that you and your loved ones are safe. The stuff you left behind — that’s what insurance is for.”

Once immediate safety is secured, homeowners should begin the claims process immediately, even if they don’t yet know the full extent of their loss. Evacuated families unsure whether their homes survived the fire should still get in line early.

Susman likened it to “taking a number at a bakery.”

“You want to be in the queue. The sooner you file, the sooner your claim will be assigned and moving.”

After catastrophic events, insurers receive thousands of claims within days. Filing early ensures you’re prioritized for adjuster contact and temporary housing benefits.

2. What to Expect When Filing a Claim

Once the claim is filed, the process can vary widely depending on the carrier. Some insurers require detailed inventories of lost property, while others issue payment up to policy limits when the loss is total.

For example:

• Partial losses may require documentation — room-by-room itemization of damaged contents.
• Total losses often qualify for immediate full-limit payments once confirmed.

However, Susman warned that policyholders working with the California FAIR Plan — the state’s insurer of last resort — should prepare for a more structured and bureaucratic process.

“They have a specific script they have to follow,” he said. “I know it’s frustrating — they’ll ask if your personal property was damaged after you’ve told them the house is gone — but they have to go through every line for every claimant.”

Patience is key. FAIR Plan adjusters handle hundreds of simultaneous claims. Understanding that repetition and documentation are part of protocol helps homeowners stay calm and keep progress steady.

3. Understanding What “Policy Limits” Really Mean

For many homeowners, the concept of “policy limits” becomes painfully real only after disaster. These limits — the maximum amounts your insurer will pay for each coverage category — determine the boundaries of recovery.

Typical homeowners policies include:

• Dwelling Coverage (Coverage A): For the home’s structure
• Other Structures (Coverage B): Fences, sheds, detached garages
• Personal Property (Coverage C): Furniture, clothing, electronics
• Loss of Use (Coverage D): Temporary housing and living expenses

When a total loss occurs, most carriers issue up to the full Coverage A amount for rebuilding. But homeowners should confirm whether their policy includes “extended replacement cost” or “guaranteed replacement cost.” These endorsements can add 20–50% above the listed dwelling limit — crucial as post-disaster construction costs surge.

“Rebuilding in California after a fire is always more expensive than people expect,” Susman said. “That’s why those extended coverages exist — to bridge the gap between what your home was worth and what it actually costs to rebuild today.”

4. Dealing with the FAIR Plan: A Lesson in Patience

As Susman pointed out, many wildfire victims will find their policies held by the California FAIR Plan Association, created as a safety net for those unable to obtain traditional coverage due to high wildfire risk.

The FAIR Plan provides essential protection — but it’s limited. It covers fire and smoke damage only. Homeowners typically need an additional “Difference in Conditions” (DIC) policy to cover theft, water damage, and liability.

“Be patient with FAIR Plan adjusters,” Susman advised. “They’re working through hundreds of claims, and their process is meticulous. But if you stick with it, they will get you paid.”

While the system can feel impersonal, it’s designed for accountability — every question and step must be recorded, which ultimately protects both the homeowner and the insurer.

5. The Changing Market: Why Coverage Availability Is Shifting

Even before the latest wildfires, California’s home insurance market was teetering. State Farm, for instance, recently dropped more than 70% of its policies in the Palisades — the highest cancellation rate in any ZIP code statewide.

At first glance, it looked like abandonment. But as Susman explained, this move may have unintentionally protected policyholders.

“It was a bit of luck for consumers,” he said. “State Farm’s financial condition is under strain — they’ve even filed for emergency rate increases, saying they don’t have enough money on hand to pay claims.”

In other words, had the company kept those high-risk policies, it might have faced insolvency when large-scale fires hit. Homeowners who moved to other carriers may now find themselves in a more stable position.

6. New 2025 Insurance Regulations: A Glimmer of Hope

Amid the devastation, there is some optimism for California’s homeowners. In December 2024, long-awaited state insurance reforms took effect. These regulations aim to bring insurers back into high-risk regions while allowing more accurate pricing models that reflect today’s wildfire realities.

Susman believes this is a turning point:

“For the first time in years, there’s a path forward. The new guidelines let companies use modern catastrophe models while requiring them to serve all parts of the state — not just the low-risk areas.”

The reforms should, in theory, make it easier for insurers to sustain coverage and pay out large wildfire claims without exiting the market entirely.

Still, the transition will take time. In the short term, homeowners can expect higher premiums in high-risk ZIP codes, but also greater policy availability as companies regain confidence in California’s market.

7. What to Do if You’ve Lost Everything

For families facing total loss, the emotional toll can be paralyzing. But there are practical steps to ensure financial recovery moves forward:

1. File your claim immediately — even if you’re not sure of total damage.
2. Keep a written log of every call or interaction with your insurer, noting names, dates, and reference numbers.
3. Request an advance payment for essentials — clothing, toiletries, temporary housing.
4. Save every receipt related to evacuation and temporary living costs. These are often reimbursable under “Loss of Use.”
5. Photograph or video your property once it’s safe to return. Even ashes tell a story adjusters can use.
6. Contact your mortgage company. They’ll likely be listed on the insurance payment checks, and you’ll need coordination for disbursements.

8. The Importance of Grace and Patience

Perhaps the most recurring theme in Susman’s advice was grace — for oneself and for the process.

“I’ve been on 30 or 40 calls with clients this week,” he said. “People are heartbroken and frustrated. But remember, the adjusters on the other end are working through hundreds of cases. It’s hard for everyone.”

Anger and exhaustion are natural after loss, but clear communication and patience make the process smoother. Having an independent insurance agent or broker advocate on your behalf can also make a world of difference — they understand how to navigate carrier procedures and escalate issues if delays arise.

9. Looking Forward: Fire Risk and the Future of Home Insurance

The future of wildfire coverage in California will hinge on balancing accessibility with sustainability. As insurers adopt more data-driven risk modeling, premiums will increasingly reflect each property’s true fire exposure — based on vegetation, building materials, and defensible space.

“Areas that are higher risk will pay more,” Susman explained. “Areas that have lower risk should eventually pay less. It’s about fairness and viability.”

Homeowners can prepare by proactively reducing their fire risk:

• Create 100 feet of defensible space around the home.
• Use Class A fire-rated roofs and ember-resistant vents.
• Clear gutters, decks, and eaves regularly.
• Maintain accessible driveways for emergency vehicles.

These actions not only improve safety but can qualify for insurance discounts under the state’s wildfire mitigation programs.

Final Thoughts: Hope Amid the Ashes

When the smoke clears, what remains for most wildfire survivors is uncertainty. But as Susman reminded viewers, insurance exists for exactly these moments — to provide a foundation for rebuilding, both physically and emotionally.

“This is what you’ve been paying for all these years,” he said. “Now it’s time for the carriers to step up and do their part. They will, but you have to start that process today.”

Wildfire survivors face an uphill climb, but they are not alone. With preparation, patience, and guidance, Californians can navigate the claims maze, rebuild their homes, and move forward stronger — and smarter — than before.

Because in the end, while fire can take homes, it cannot take resilience. And as the insurance market reforms begin to take hold, there’s real hope that the next time disaster strikes, Californians will face it with greater stability and confidence.