California wildfires raise concerns about insurance coverage, rising premiums

HOUSTON – As catastrophic losses mount from the Los Angeles wildfires, the fight is beginning for homeowners who have insurance to get settlements for their losses. Those losses are already estimated at more than $50 billion, and climbing with each day as the fires continue. 

Many of the affected homeowners didn’t even have insurance because they’d paid off their mortgages, and gambled that they’d be safe. The experience for everyone else will affect the rest of the country.

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Insurance claim negotiator Ron Snouffer doesn’t represent any of the California wildfire victims, but he has certainly handled cases like them, “It doesn’t, necessarily, fall on the insurer to prove they had damage; it falls on the homeowner.”

While the wildfires still rage and smoke hovers over homes and memories, the challenge for those whose losses are insured turns to finding fair settlements. That’s no easy task when there is little to show what was there.

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Like the swarm of tornadoes that struck the Houston-area in late December, damaging dozens of homes and belongings were scattered far and wide. For most victims, the advice is too late, but Snouffer encourages proactive documentation of belongings that can be provided to insurance adjusters to prove what was lost. 

“There’s no rhyme or reason on who they pay an advance payment and who they don’t, other than the people who document their stuff better generally get those advance payments, and get them quicker,” he says.

Still, despite U.S. insurers making record profits in 2023, according to the National Association of Insurance Commissioners, premiums have steadily risen for much of the country, particularly in Texas. The insurance industry says it’s paying for more losses, so rising prices are likely to continue while California is the latest example of what happens in the aftermath of disaster. 

“California’s going to look very different for the next 10 to 15, probably 20 years,” says Snouffer.

California’s insurer of last resort, which caps payouts well below what a lot of losses will be, operates similarly to the Texas Windstorm Insurance Association. TWIA, as it’s called, already doesn’t have enough money to cover a major loss and will petition the legislature to raise rates. To protect yourself, use your cell phone and take a video tour of your home to document everything you’ve got, to help ensure you’re getting what you pay for.

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