On November 8, 2018, two fires ravaged California. The Camp Fire, the deadliest fire in state history, killed 86 people, destroyed 18,804 buildings and burned 153,336 acres. It burned down the entire town of Paradise in Northern California. Affected most were families, with nearly 14,000 single-family homes were destroyed. The fire burned more than 500 commercial buildings and was contained in 17 days.
That same day, the Woolsey Fire burned through parts of Southern California. It spread through Los Angeles and Ventura counties, burning 96,949 acres. Three people were killed and 1,643 buildings were destroyed. The fire was contained in 13 days.
Given that many of these homes, businesses and structures were covered by insurance, you can imagine that insurance companies will paying a pretty penny to homeowners looking to rebuild. In fact, the total costs could top $9 billion and reach as high as $13 billion.
AIR Worldwide, a catastrophe modeling firm, estimates that the Camp Fire alone will cost insurance companied between $6 billion and $9 billion. Combined with the Woolsey Fire, the totals will reach $9 billion to $13 billion. This is the same range that RMS predicted in November. These estimates are based on take-up rates of nearly 100 percent, since homeowners insurance policies in California automatically include wildfire damage.
AIR came up with these estimates with help from its AIRWildfire Model for the U.S. These estimates are based on last year’s exposures. There is a range of estimates due to several factors, including living expenses due to mandatory evacuations, ordinance losses, damage to individual structures, suppression efforts, loss of electricity, and damages due to smoke. Loss estimates include physical damage to commercial buildings, residential homes and mobile homes, as well as their contents and automobiles.
Business interruption losses were also included in the estimates, as well as demand surge. This refers to the extra costs associated with increased labor, materials and services due to increased demand after a catastrophe. Not included in the estimates are losses to uninsured structures, losses to infrastructure and land, lost adjustment expenses and losses due to indirect business interruption.
These numbers alone are quite shocking, but industry data provider CoreLogic estimates that the total losses could be even higher. It estimates that both fires could result in losses ranging from $15 billion to $19 billion. The damages for the Camp Fire alone were estimated to be between $11 billion to $13 billion.
The insurers with the highest exposures in these fire areas include State Farm, Farmers Insurance, Allstate, Liberty Mutual, Auto Club and CSAA. Farmers expects more than $2 billion in claims. It has already received more than 9,000 claims from both fires. The company claims it is in a good position to compensate homeowners for the damages they incurred. A large percentage of those claims will be paid by reinsurers. The net result after taxes and reinsurance will be $159 million.
To compensate insured homeowners who lost their homes in the Camp Fire, State Farm has already paid more than $77 million in claims. For the Woolsey Fire, State Farm has paid $25 million in claims. On top of that, the insurer has paid $6.7 million in auto claims.
Many insurance company representatives just stepped foot onto the areas burned by the Camp Fire. Therefore, the actual damages could be much higher than the estimates. To estimates losses thus far, many insurance companies use drones to survey the damage. The California Department of Insurance will compile losses by insurance companies and make those numbers public knowledge in the coming months.
The California Wildfire Attorneys of Nadrich & Cohen and its legal teams continue to actively file cases on behalf of wildfire victims and their families. Don’t wait until it’s too late to make a claim, call us for a free consultation. Our team is available to answer your questions. Call us now at 1-800-718-4658.