BiggerPockets Daily How to Handle a Property Loss From a Wildfire
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Feb 16, 2025 Recent wildfires in Los Angeles wreaked havoc on property owners and prompted insurers to reconsider coverage options. The limited FAIR Plan offers some relief, yet many still face uncertainty. Meanwhile, the discussion includes resources and responsibilities for landlords and tenants, stressing legal compliance to prevent price gouging. Additionally, navigating the aftermath involves understanding insurance claims and leveraging community support for recovery. It's a high-stakes environment for those affected, balancing recovery and resilience.
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Insurers Flee Before Fires
- Insurers foresaw the increasing fire risk in California due to dry conditions and lack of controlled burns.
- They began dropping policies months before the LA wildfires, leaving property owners with limited options.
FAIR Plan Option
- Landlords in high-risk fire zones should consider the California FAIR Plan for basic fire insurance.
- However, it's costly and limited, covering only dwelling and personal property at cash value, not replacement cost.
FAIR Plan Coverage Gaps
- The FAIR Plan's cash value coverage may not suffice to replace a property due to increased construction costs and labor shortages.
- This poses a significant challenge for landlords relying solely on this insurance.