With the number of catastrophic and record-breaking wildfires increasing in California year by year, it is more important than ever to make sure you are fully covered by insurance in the event of wildfire damage. The last thing you want to discover when attempting to file an insurance claim for your financial losses is a wildfire insurance gap.
What Are “Wildfire Insurance Gaps”?
A wildfire insurance gap refers to a situation where a claimant’s wildfire-related losses exceed available insurance coverage or fall outside of the terms of the policy, creating a gap in what is covered. The individual may be personally responsible for covering the difference between what insurance pays for and actual losses with his or her own money.
How to Navigate Wildfire Insurance Gaps
Wildfire insurance gaps are growing in California as wildfire season worsens year after year. Insurance companies are more likely than ever to limit the coverage available and withhold insurance policies, forcing homeowners to search elsewhere to supplement their coverage. Identify your liability risk preemptively, before your property gets damaged by a wildfire, and search for ways to fill a potential insurance gap.
You may be eligible for an alternative form of insurance if you live in a high-risk area, for example, such as California’s FAIR Plan. This is a last-resort type of insurance with basic fire coverage for those who are unable to secure traditional homeowners insurance policies. If an insurance gap is only discovered after your property has suffered wildfire damage, you may need to consult with a California wildfire attorney for assistance obtaining coverage that matches the true value of your property damage. Your lawyer can help you address and navigate wildfire insurance gaps, such as by documenting your damage accurately, proving the value of your losses and fighting against unfair policy exclusions.
Common Examples of Wildfire Insurance Gaps in California
In many high-risk wildfire locations, insurance companies have diminished the coverage they offer for wildfire damage or refused to renew policies. This can happen without warning, potentially leading to a gap in coverage that isn’t discovered until after fire damage has already occurred. Check on your policy periodically to ensure you still have adequate coverage. Common scenarios that lead to wildfire insurance gaps include:
- The price to rebuild a home or business exceeds insurance policy limits.
- Coverage is limited for damaged landscaping and outbuildings.
- Personal property is valued higher than the available dwelling coverage (i.e., lack of special endorsements for high-value items).
- Insurance is not enough to pay for the cost-of-living expenses while repairs are underway.
- An insurance company disputes coverage for smoke or water damage from wildfires.
The possibility of a wildfire insurance gap makes it important to ensure you have adequate coverage if you live in a high-wildfire-risk area in California. Certain parts of the state have larger wildfire insurance gaps than others. This is typically due to the high values of properties within the region in addition to the wildfire risk.
Wildfire Insurance Gaps and Lawsuits
It may be possible to bridge a wildfire insurance gap by filing a lawsuit against the person or party responsible for causing the fire. Many of the worst wildfires in California’s history have been caused by utility companies or human activity. In these cases, the at-fault party could potentially be required to pay a judgment award to affected individuals. The amount awarded may exceed how much is available through an insurance policy alone.
If a wildfire investigation determines that a faulty powerline or electrical issue sparked the fire, for example, a utility company could be required to pay for 100 percent of a victim’s related costs and losses, even if this is more than what is available on the individual’s insurance policy. To discuss your financial recovery and how to bridge insurance gaps after a wildfire, contact Bridgford, Gleason & Artinian for a free consultation with an experienced wildfire attorney.