Our hearts are heavy as we extend our deepest sympathies to the victims of the recent fires in Los Angeles County. The loss and uncertainty these communities are facing are truly heartbreaking.
These tragic events serve as a stark reminder of the growing frequency and severity of wildfires across California, underscoring the urgent need for resilience, preparedness, and support. My thoughts are with the victims, first responders and all impacted by these horrible fires.
The last major fires that hit home in 2018 (Woolsey & Hill Fires), I wrote blog post regarding insurance tips for South Bay residents to consider. I feel it is time for me to revisit and update that post considering the circumstances and hope South Bay homeowners can prepare and seek the proper protection for their risk tolerance. This is a link to the old post from November 2018: California Fires: Essential Fire Insurance Tips for South Bay Homeowners
Below I will cover some of the same topics and add further detail. Please note this is not advice and that I am not an insurance professional. You should seek advice from a licensed, trusted insurance professional. I hope this list helps you get started.
Understanding Your Policy
Many homeowners believe their standard insurance policy has them covered, but the reality is often more complex. While most policies include “replacement value” coverage, this doesn’t necessarily mean you’ll be fully compensated for rebuilding your home. A major gap in many policies is the lack of “ordinance or law” coverage, which can leave homeowners facing significant out-of-pocket costs.
The Importance of Ordinance or Law Change
Ordinance or law coverage accounts for updates to building codes since your home was constructed. These updates can add significant costs when rebuilding.
Here are some examples of code changes that may apply:
- Mandatory fire sprinklers in all new construction.
- Replacement of main sewer laterals from the home to the city connection.
- Landscaping requirements for water conservation.
- Upgrades to insulation, energy efficiency, and heating/cooling systems.
- Solar panel installation, now required on new homes in California.
- Water-efficient fixtures and roofing requirements that meet modern standards.
Homes built or remodeled even five years ago may face compliance issues with these updated codes. Without ordinance or law coverage, homeowners could be responsible for tens or even hundreds of thousands of dollars in additional costs.
Cost of Ordinance or Law Coverage
Adding ordinance or law coverage is often more affordable than many assume. While prices vary depending on factors like the age and condition of your home, supplemental coverage often is a cheap add-on that can offer hundreds of thousands more of insurance. For newer homes, this coverage may not be necessary, but for older properties, it’s an invaluable investment.
Loss of Use Insurance
If your home becomes uninhabitable due to a fire? Where will you live during the rebuilding process?
Loss of use insurance covers temporary living expenses, including rent for up to 24 months. Given the lengthy rebuilding process—especially in areas with significant fire damage—this coverage is vital. It can also cover income lost from rental properties if you’re a landlord. The additional cost for loss of use coverage is generally modest, making it a smart choice for most homeowners.
Additional Coverage Options to Consider
- Extended Replacement Cost Coverage: This ensures your policy covers rebuilding costs even if they exceed your policy’s stated limit due to inflation or increased material costs during high-demand periods.
- Debris Removal Coverage: Wildfire damage often leaves extensive debris that requires costly removal before rebuilding can begin.
- Fire Department Service Charges: Some municipalities charge fees for emergency fire services; this supplement can cover those costs.
- Additional Living Expenses (ALE) Extensions: Consider policies that offer extended ALE to cover longer rebuilding timelines in areas with significant wildfire damage.
- Wildfire Insurance Riders: Some insurers now offer riders specifically for wildfire mitigation, providing discounts or coverage for implementing fire-resistant upgrades.
Final Thoughts
If you’re unsure about your current policy or haven’t reviewed it recently, now is the time to call your insurance agent and take a closer look. Many of the policies mentioned above are affordable and provide excellent coverage to protect your home, investment, and, most importantly, your family’s well-being.
Having the right coverage can make all the difference in recovering from a fire and rebuilding your life. Don’t wait—reach out to your trusted insurance professional for guidance and peace of mind.
Stay safe.
*Photo is by Getty Images, Vogue