California Wildfire Business Insurance Check List

The devastation caused by recent California wildfires has left many individuals and businesses grappling with significant and unimaginable losses. In 2025 alone, over 50,000 acres have burned.  See California Fires Current Emergency Incidents for a current assessment of California wildfires.  Early insurance risk modeling indicates that insured losses will exceed $32.5 billion.

Insurance coverage will play a major role in making the victims of these wildfires whole.  The considerations outlined below identify some of the issues that corporate policyholders should consider when making and pursuing a claim for insurance coverage of their losses.

1. Provide Notice

Providing prompt notice of the loss to all applicable insurers is critical.  Late notice of a claim is a favorite ground used by insurers to deny coverage.  Notice is typically given through the insured’s insurance broker.  This is not a complex undertaking.  Nonetheless, policyholders should request that their insurance broker send them a copy of whatever notice has been provided.

2. Document the Loss

Thorough documentation is crucial for a successful claim. Photograph and video all damage, and create an inventory of lost or damaged items.  Take pictures of everything.  Keep and maintain records for lost revenue and additional expenses as well.

3. Public Adjusters Will Be Contacting You

Public adjusters are typically the first to offer policyholders help.  They closely follow catastrophes and aggressively market their services.  Their rates vary, but they typically range from 5 to 20 percent of recoveries.  Their recoveries are set by the contract that they will enter into with you, and they get paid even if the claim stalls and legal help is required.   In certain situations, they may be incentivized to settle claims for less than the claims are worth.

Policyholders should also keep in mind that communications with public adjusters are not privileged.

4. Evaluate Coverage

Once the claim has been made, Policyholders should thoroughly review their insurance policy.  Unfortunately, the experience of reading a lengthy insurance policy, for most policyholders, is not pleasant. It is, however, quite important.  Pay particular attention to limits and retentions, as overlapping coverages may contain markedly different limits.

For example, part of the loss may be covered under both the “civil authority” coverage grant and the “ingress egress” coverage grant, and these coverage grants may contain markedly different sublimits.  Policyholders should determine what coverage grant they want to apply to their losses and not allow insurers to make that decision.

5. Calendar Policy Deadlines

Property insurance policies are filled with landmines that can negate coverage.  Many policies contain “proof of loss” deadlines, often 90 or 180 days.  These provisions may require a policyholder to submit a sworn statement signed under oath that outlines the total loss claimed.  For a complex losses, or any losses involving business interruption, it is virtually impossible to meet these deadlines.  Policies may also contain a one or two-year suit limitations clause requiring the policyholder to file suit within that time period in order to preserve coverage.  Insurers will often extend these deadlines, but policyholders must request the extension.  All too often, a deadline is missed, and the next letter the policyholder receives from the insurer states that the policy no longer provides coverage.

6. Present All Covered Losses

In addition to coverage for property damage and business interruption losses, policyholders should also take advantage of ancillary coverage grants that may provide additional coverage.  These include, but are not limited to:

• Extra Expense (expenses to ramp up business after loss);
• Civil or Military Authority (loss of income caused by a civil order to evacuate);
• Contingent Time Element (business interruption loss caused by fire damage to others);
• Debris Removal (costs to remove debris from the property after the fire);
• Decontamination Costs (costs to clean up contaminated property);
• Ingress/Egress (business losses caused by the inability to access property);
• Service Interruption (business losses caused by an interruption of utility services);
• Professional Fees (accounting and sometimes legal fees to resolve the claim);
• Sue and Labor (costs expended to prevent fire loss).

7. Valuation Is an Issue

For fire-damaged property, valuation is always an issue.  With a replacement cost policy, the insurer is required to pay for the actual cost of rebuilding the property, even if a less expensive alternative is available.  This is critical for older wood buildings, for example, where the cost of replacing the wood building is significantly more than it would cost to build a new state-of-art building.   Here, the insurer must pay the higher cost, even if the policyholder pockets the difference and rebuilds with a less expensive alternative.

If the coverage is for “actual cash value” rather than replacement cost, the insurer may excessively depreciate the property to minimize payments.  The problem with depreciation is that there is no objective standard for depreciation.  The insurer may say that something has a useful life of 15 years when the item in question may be fully functioning 40 years later.

8. Demand Partial Payments as the Claim Progresses

Policyholders should demand interim payments to fund cleanup and repair the property, and those funds should be paid long before the insurer finalizes the claim.  When interim payments are made, policyholders should examine closely any documentation that the insurer requires in order to process payment so that rights are not compromised.

Conclusion

Navigating insurance claims after a wildfire requires careful attention to policy details and proactive claim management. If you receive a denial of coverage, or if your insurer is not supporting your understanding of the loss, consider consulting with an experienced insurance coverage attorney.