Karl Susman Discusses Homeowner Insurance Payouts After Wildfires | KNBC TV News
Published Date: 01/25/2025
When Wildfire Strikes: How Homeowners Can Navigate Insurance Payouts, Rebuilding, and Recovery
California’s wildfire season has once again left families across the state reeling. Beyond the physical and emotional devastation, survivors now face another daunting task—dealing with their homeowner’s insurance payouts. For many, this process can take months—or even years—and comes with complex choices about whether to rebuild, relocate, or start over somewhere else.
In a recent KNBC TV News segment, consumer reporter Chris Kimura spoke with industry experts, including Karl Susman, host of Insurance Hour and veteran California insurance broker, to shed light on what homeowners can realistically expect after a total-loss fire. Their discussion offered critical insights into timelines, payout structures, and the practical steps families can take to ensure they receive what they’re owed.
1. The Long Road Ahead: Understanding the Recovery Timeline
When a wildfire destroys your home, insurance coverage is supposed to help you rebuild your life. But the timeline is rarely quick.
According to Karen Collins of the American Property Casualty Insurance Association, most homeowners should brace for a process lasting many months to several years. Between securing permits, selecting contractors, and navigating supply shortages, even straightforward rebuilds can stretch beyond expectations.
As Collins told KNBC:
“Realistically, it’s going to take months or even a couple of years to go through the process of securing permits and identifying a contractor.”
For families still reeling from displacement, those words can be crushing. Many homeowners find themselves facing the uncomfortable question: Should we rebuild—or should we move on?
2. Rebuild, Relocate, or Restart: The Insurance Implications
After a wildfire, insurance companies typically owe you the cost to rebuild or replace your home. But how that payout is handled depends on what you decide to do next.
Karl Susman explained it simply:
“As long as you are putting yourself back in a home, you should be getting the same type of recovery from your insurance company.”
That means whether you rebuild on your original lot, buy an existing home somewhere else, or even build a new house in a different city, your replacement cost coverage should follow you—as long as your intent is to live in a comparable home.
However, choosing not to rebuild can significantly affect your payout. Homeowner’s policies are designed to restore your living situation—not to hand over unrestricted cash. If you take your insurance money and decide not to purchase or build another home, you may receive only the depreciated actual cash value (ACV), not the full replacement cost.
Susman cautions that,
“You might be penalized if you do not rebuild, replace, or repurchase.”
3. The Mortgage Factor: Why the Bank Still Has a Say
If you own your home outright, you have a direct path to handling your payout and deciding your next steps. But if you have a mortgage, your lender becomes part of the conversation.
Insurance checks for a total loss are typically made payable to both the homeowner and the mortgage holder, since the bank also has a financial interest in the property. That means before you can cash or deposit the funds, the bank must endorse them.
Susman clarified that this isn’t a roadblock—just another administrative step:
“If you had a mortgage, you’re going to have to involve your bank. That’s not a brick wall—it’s just another step.”
Still, it can delay access to funds, especially if the mortgage company requires documentation proving that repairs or replacements are underway before releasing the full amount.
4. Don’t Forget the Land: Your Lot Still Has Value
Even after a home burns down, the land itself retains value. That’s an important and often overlooked part of the recovery equation.
Insurance doesn’t pay to replace land—it only covers structures and contents—but when you calculate total loss, the value of your lot can play a significant role in financial planning. Selling a fire-damaged lot might give you additional funds to relocate, while rebuilding on it can preserve long-term equity in a recovering area.
As Kimura’s report noted, homeowners need to factor that residual land value into any decision about rebuilding versus relocating.
5. Documentation Is Everything: Protect Yourself During Claims
The insurance claims process after a wildfire can be chaotic, with hundreds or thousands of policyholders filing at once. Amid that volume, clear documentation becomes your strongest defense.
Susman’s advice is straightforward and essential:
“Talk with your insurance company about your options. Keep a record of your calls and keep track of who promises what and when.”
That means keeping:
- A logbook of all communications (dates, times, and representatives spoken to).
- Emails and letters confirming any promises or settlement figures.
- Photos and videos of your home before and after the loss.
- Copies of permits, contractor estimates, and receipts for rebuilding expenses.
If disagreements arise over coverage or payouts, this paper trail can be invaluable—especially if you need to escalate your claim or seek help from the California Department of Insurance (CDI) or a public adjuster.
6. The Emotional Cost: When “Starting Over” Isn’t So Simple
Insurance can’t replace memories, stability, or the emotional weight of losing a home. Many wildfire survivors struggle with “decision fatigue”—balancing the desire to rebuild their community with the trauma of living through repeated fire seasons.
Susman’s practical insight comes with empathy: families must weigh both financial and emotional recovery. Rebuilding in the same area can bring back a sense of home—but also renewed anxiety about future fires. Relocating may feel like defeat, but it can offer peace of mind.
There’s no universal answer—but understanding the insurance implications of each choice helps families make decisions from a position of strength, not fear.
7. The Broader Picture: Wildfires and California’s Insurance System
Wildfire recovery isn’t just a personal challenge—it’s a symptom of a system under strain.
California’s insurance market is facing unprecedented pressure. As losses mount, insurers are scaling back coverage, raising rates, or exiting entirely. Homeowners in high-risk zones increasingly rely on the
California FAIR Plan, the state’s insurer of last resort.
While FAIR Plan policies can help bridge gaps in coverage, they don’t replace the comprehensive protection of standard homeowner’s insurance. They’re often more expensive and cover fewer perils, meaning survivors may face limited options even after receiving payouts.
For California to maintain a functioning insurance system, policymakers, regulators, and carriers must continue working toward sustainable solutions—balancing affordability, accessibility, and solvency in the face of a changing climate.
8. Practical Steps for Homeowners Filing Wildfire Claims
If your home was lost or damaged in a wildfire, these steps can help streamline the recovery process:
- Contact your insurer immediately. Start your claim as soon as it’s safe to do so.
- Ask about advance payments. Many companies can issue immediate funds for temporary housing or essential needs.
- Request a full copy of your policy. Know your coverage limits, endorsements, and deadlines.
- Take photos and videos. Document every room, appliance, and personal item lost.
- Track living expenses. Keep receipts for hotels, meals, and transportation—these may qualify for Additional Living Expense (ALE) reimbursement.
- Stay proactive with your adjuster. Follow up regularly and confirm agreements in writing.
- Consult a professional if needed. Public adjusters or legal advocates can help navigate disputes.
9. A Message of Resilience: Insurance as a Bridge, Not a Burden
In the aftermath of wildfires, it’s easy to feel powerless. But insurance—when understood and managed strategically—can be the bridge between devastation and rebuilding.
As Karl Susman reminds homeowners, the goal of insurance isn’t to hand you a windfall—it’s to restore your footing:
“Insurance policies are designed to put you back where you were, which is in a house—not with cash in the bank.”
By understanding how payouts work, maintaining documentation, and making informed choices, families can rebuild their lives with confidence—and help shape a more resilient insurance future for California.
Conclusion: Turning Recovery Into Renewal
California’s wildfires have become both a natural and financial disaster. But amid the loss, stories of perseverance emerge. Homeowners who navigate the insurance maze successfully do so not by luck, but by preparation, persistence, and knowledge.
If you’re facing a claim or helping clients through recovery, take this to heart: your insurance policy is more than paperwork—it’s a promise. Understanding how it works, and how to make it work for you, is the key to turning tragedy into a new beginning.
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