Not Surprising, But Most LA Residents Burned Out In January Fires To Find Insurance Won't Be Remotely Enough To Rebuild

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How many Angelenos find themselves in this difficult situation, and how underinsured they are, will influence who gets to rebuild. Experts said this will probably play out unevenly across the city. The Pacific Palisades neighborhood, where a fire destroyed more than 6,800 structures, is one of the wealthiest communities in America. But the suburb of Altadena, where 9,400 structures were lost, is more middle class. Many families inherited their homes or bought them decades ago. And while homeowners there may have plenty of home equity — the average home values there were more than $1 million before the fire — many may have limited savings. Four years after the CZU Lightning Complex fires destroyed Anderson’s house, a grand jury report found that fewer than a third of the homes lost in the fire have been rebuilt. The report said many residents found themselves underinsured “to the degree that they simply could not bear the cost to rebuild,” while “others were unable to rekindle their dreams because they found themselves unable to navigate a lengthy and often bewildering permitting process.”

After the 2021 Marshall Fire destroyed close to 1,000 homes near Boulder, Colorado, Bach’s group surveyed victims and found they were overwhelmingly underinsured, with about 80 percent of respondents reporting that their policies would not cover the cost of rebuilding their homes. A study by Colorado’s Division of Insurance found a greater range: Between a third and two-thirds of all homes affected by the fire were underinsured for typical rebuilding costs. Only 8 percent of the homes in the study had guaranteed loss coverage, meaning insurers had agreed to pay the full rebuilding costs, no matter how high.

Colorado Insurance Commissioner Michael Conway said that after the fire, it became clear that some people had bought too little insurance because companies had given them bad information about how much coverage they would need, sometimes in an effort to outcompete other insurers with lower premiums. California and Colorado have put rules in place to try to prevent this. Pandemic-fueled inflation and rising rebuilding costs, which often occur after a natural disaster, also played a role.

But Conway said the biggest factor was the increasing unaffordability of insurance. Facing costs well beyond what they could pay, some homeowners had decided to scrimp by lowering their coverage or excluding coverage for certain risks. Many of the people who did rebuild pulled together the funds from other parts of their coverage, he said. Others raided their retirement savings. “When you see insurance premiums increase to deal with climate change — you’re going to see people react by decreasing their coverage,” he said. “That is happening.”

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https://www.washingtonpost.com/weather/2025/02/07/homeowners-insurance-fire-altadena-pacific-palisades/