Los Angeles’ wildfire recovery will be a long process, and the costs may be more than they initially appear, according to a post on the CoreLogic website from the company’s insurance team.
Smoke, heat, ash, and burns have marked nearly 20,000 properties within the perimeters of the Palisades Fire and the Eaton Fire that devastated Los Angeles and left an estimated $35 to $45 billion in insured damages.
As the residents come to terms with the city’s new landscape, many still don’t know when, or even if, they can return to their homes.
The latest data from CoreLogic shows an estimated 60 percent of these properties will be total losses. But there are still homes standing. What will happen to homes that were not completely destroyed by fires?
Although many of the homes left within the fire perimeters may look intact, when you peel back the surface, the walls often tell a different story — one that is often overlooked.
In its report, CoreLogic notes a standing home is not a safe home.
Thousands of area residents are currently displaced. Many don’t know for how long. For insurers supporting these uprooted Californians — often policy terms require additional living expenses (ALE) to be 20 percent of the reconstruction cost value — ongoing costs could exceed $500 million per month. And this expense is only one of many that can be claimed by homeowners who are facing months, if not years, of remediation and rebuilding.
Even in cases where a complete rebuild is not necessary, remediation and restoration costs can be extensive. Just minimal fire remediation can take weeks to complete. But in most cases, they are unlikely to be minimal.
“One of the things we know, especially from being in the fire business for 20 years myself, is that for the inside of any house that is this close to a fire event, the damage is pretty extensive,” CoreLogic President of Global Insurance Solutions Garret Gray said in the report.
Even simple testing or a straightforward wildfire damage assessment to understand toxicity levels and determine if a home is habitable are costly and time-consuming. Couple that with extensive smoke damage, debris removal, clean up, demand surge, plus additional living expenses, and insurance claims are likely to be significant.
As to the true cost of the Los Angeles wildfires, CoreLogic says the scale of these fires makes them one of the greatest natural catastrophes in the history of Los Angeles.
Insurers must achieve a delicate balance as they coordinate and manage the rebuilding of Los Angeles. While remediation and reconstruction cannot happen overnight, it’s still imperative to work against the clock.
“Time is not our friend,” Gray said. “Soot is corrosive. It eats away at whatever it’s on, so the integrity of whatever it’s sitting on is being degraded every day that it’s not able to be cleaned.”
As homes are left standing, hidden damages will only compound. At the same time, the elevated demand for restoration and remediation will intersect with limited resources to stretch rebuild timelines and extend the time it takes to identify the hidden damage left by these wildfires.
Nurturing relationships between insurers and restorers is critical in the wake of these perils that are only becoming more frequent and more severe. Although rebuilding cannot occur as swiftly as we might wish, offering hope to those in distress depends on the collaboration and dynamics between insurers and restorers.
Nevertheless, there will inevitably be many California residents who leave the state — either permanently or until they can return to their homes.
Therefore, it is important for insurers to take the lessons learned throughout the rebuilding of the Los Angeles area and apply them to operations in all states, not just for the out-of-state Californians, but for all insurers who are just one unprecedented natural disaster away from upheaval.