We are just about to head into fall, which is typically wildfire season in California. While this year has not been as dry as years past, wildfires are still possible, as evidenced by the recent York fire in the eastern part of the state.
With wildfires seemingly a constant threat in California, many insurance companies are adjusting the type of coverages that they are offering in the state. Many are adding exclusions or otherwise reducing the scope of coverage for damages associated with wildfires. While not directly tied to this specific type of claim, industry giants like Allstate and State Farm have recently revealed their decision to cease providing homeowners insurance for new policyholders.
The reduced number of insurers in the state and the increasing frequency of exclusions tied to these types of fire losses has given rise to significant coverage concerns for property owners throughout the state. This shift in the industry can at least in part be tied to the intertwining risks of wildfires and mounting reconstruction expenses. Understanding these dynamics and, perhaps more importantly, the scope of your property coverage in the aftermath of prior fire losses is pivotal. At the very least, business owners and other owners of real property can use this knowledge to equip themselves to prepare for future fire losses.
First-Party Property Claims – What Are They?
In short, these are the claims that you would file with your insurance company for damage to your own property, such as if your home suffered damage as a result of a wildfire. First party claims typically involve damage to your commercial or residential property, as well as the damage to or loss of your business or personal property. Such policies may also afford coverage for finding temporary office space or to rent a home while repairs are on-going, as well as the attendant costs that come with operating a business from a temporary space or living in a temporary home. Sounds easy, right?
Unfortunately, this is not as simple as it might appear at first glance. Some of this may be related to the coverage that you have in place. Do you know what sort of compensation limits there may be in the event of a fire? Are there any exclusions that might apply? For example, some recent policies are being amended to exclude smoke or soot damage. Also, property policies frequently cap the amount of time for which they will compensate you if your business is forced to operate from a temporary space or if you are forced to move your family to a rental property.
Understanding The Scope of Coverages
After the many wildfires that have hit California and other western states over the last few years, the insurance industry has begun taking steps to narrow the coverages that they afford for these kinds of losses. This trend makes it even more important for your business to understand the coverages that are being provided and to make sure that encompass the more critical aspects of your business. The same is true for your personal property. Failing to properly plan could have extremely harsh financial consequences. And, if a loss does occur, it is important to have the right team to assist your company or you in navigating the loss process, both to help mitigate your out of pocket expenses and to help maximize coverage for the loss.
In our next post, we’ll discuss the issue of third-party liability when it comes to wildfires in California. Should you have questions concerning an insurance law matter, please reach out to our law firm to meet with an experienced attorney about your options.