Tens of thousands of California residents will decide whether to permanently relocate or rebuild their homes after the most destructive fires in Los Angeles’ history.
Insurance companies may cover thousands of dollars in temporary housing and living expenses — unless homeowners are underinsured or not covered.
“The policy is generally going to cover the cost of additional living expenses while you are out of your home, to maintain what is kind of your usual standard of living,” said Karen Collins, the vice president of American Property Casualty Insurance Association’s property and environmental division.
For example, if someone’s insurance covers $100,000 for a property, the insurance company might cover another $20,000 — or 20% — in additional living expenses, Collins said.
Peter Vanek, president of PVRK, a Southern California-based real estate consulting company, said his home was destroyed by a battery fire in 2023. His insurance initially estimated $350,000 for the house. After Vanek provided evidence of what was lost, his insurance paid twice as much, including living expenses while he relocated, and the house was rebuilt.
To relocate or rebuild?
Insurance coverage plays an outsized role in the decision to move or invest resources into reconstruction. For some with insurance, it could boil down to having pictures of the property before the damages and updating insurers with home estimates.
“(Homeowners) might not have disposable income to cover the difference between whatever their insurance is going to cover and what their cost is to rebuild their home, replace all of their items,” Vanek said.
The current wildfires in Los Angeles County are the costliest and most destructive in its history. The insured losses could exceed $20 billion, according to a report by JPMorgan Chase.