[Tens of thousands of California residents will decide whether to permanently relocate or rebuild their homes after the most destructive fires in Los Angeles’ history. Insurance companies may cover thousands of dollars in temporary housing and living expenses, but only if homeowners are adequately insured.
The policy is generally designed to cover the cost of additional living expenses while homeowners are out of their homes, to maintain their usual standard of living. For example, if someone’s insurance covers $100,000 for a property, the insurance company might cover another $20,000 – or 20% – in additional living expenses.
Insurance coverage plays a crucial role in the decision to move or invest resources into reconstruction. For some with insurance, it could boil down to having pictures of the property before the damages and updating insurers with home estimates.
Between 2020 and 2022, insurance companies declined to renew 2.8 million homeowner policies in California, including 531,000 in Los Angeles County. The current wildfires in Los Angeles County are the costliest and most destructive in its history, with insured losses exceeding $20 billion.
California Department of Insurance Commissioner Ricardo Lara has issued an order for insurance companies to stop any pending non-renewals or cancellations for properties near the fires. Moving isn’t necessarily easier than rebuilding, as moving locally typically costs between $884 and $2,569.
Most residents impacted by natural disasters don’t move, but instead stay put and rebuild. Local economies receive a boost after natural disasters as residents purchase goods and services to rebuild. Immigrant workers, who make up about a quarter of the construction industry, have flocked to areas hit by natural disasters, such as New Orleans after Hurricane Katrina and parts of Florida.
However, proposed mass deportations could cause construction work to stall, as well as make imported materials, such as appliances, more expensive. Independent contractors and home builders, not major companies, will primarily lead the construction efforts in California. Despite the challenges, Vanek believes that there’s no efficiency in rebuilding a fire-ravaged community.
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