When the flames subside and the smoke clears, California is left facing what experts now call the most expensive disaster in U.S. history. Beyond the heartbreaking loss of homes, businesses, and natural beauty, this catastrophe has unleashed a financial and insurance crisis that will ripple through every corner of the country.
Insurance expert Karl Susman, host of Insurance Hour, recently broke down how this disaster affects everyone—not just those in burned neighborhoods. His insights reveal an intricate web of consequences that connect wildfire losses to global insurance markets, supply chains, and even your household budget.
At first glance, it's easy to assume that wildfire victims are only those whose homes or vehicles were directly destroyed. But as Susman points out, the impact extends far beyond the fire zones.
Consider the ripple effect: when hundreds of homes and businesses in areas like Pacific Palisades are gone, so are the jobs that supported them. Pool cleaners, landscapers, home cleaners, construction crews, local grocers, and car wash attendants suddenly have no work.
This loss of income triggers a domino effect across California's economy. Fewer paychecks mean reduced spending in other sectors, from restaurants to retail. Even people living hours away may feel the sting as local economies tighten and prices rise.
In short, everyone—from the small business owner in Los Angeles to the homeowner in Fresno—feels the shockwave of these fires.
Susman explains a concept most people have never heard of but that quietly determines their insurance costs: reinsurance.
Reinsurance is essentially "insurance for insurance companies." It helps spread financial risk so that when a massive catastrophe strikes—like California's wildfires or even an international event such as a shipping disaster—no single company is wiped out.
But here's the twist: these reinsurers operate globally. When billions are paid out for California's losses, reinsurance premiums rise worldwide. That means even homeowners in Texas or New York could see their rates increase because of fires hundreds of miles away.
This interconnection highlights a critical truth about modern risk: disasters are global financial events. The destruction in Malibu might soon affect your renewal premium in Miami.
Once the fires stop, the next challenge begins—rebuilding. Construction resources are now in short supply. Skilled labor, lumber, roofing materials, plumbing parts, and even architectural services are suddenly in enormous demand.
Susman notes that after major wildfire events, rebuilding costs can soar to $1,000 per square foot, compared to pre-disaster estimates of $300–$400. For many, this means that even a full insurance payout might not be enough to rebuild the same home they lost.
This inflation doesn't just hit those directly impacted—it drives up costs across the construction industry. Whether you're repairing a fence, remodeling your kitchen, or hiring a plumber, expect higher quotes and longer waits.
For homeowners who can't find coverage in the private market, California offers the FAIR Plan (short for Fair Access to Insurance Requirements). It's designed as a last resort, providing basic fire coverage when traditional insurers say no.
But Susman warns that while the FAIR Plan offers a critical lifeline, it's under heavy strain. Funded by the very private insurance companies that have exited high-risk areas, the FAIR Plan is now facing record-breaking claims from the recent fires.
To pay these claims, the Plan will issue what's known as an "assessment"—a mandatory call for additional funds from private insurers based on their market share. Ironically, that means the same insurers who declined to cover high-risk properties are now indirectly footing the bill for them.
While this ensures claims will eventually be paid, Susman cautions that service may suffer. The FAIR Plan's limited staff and reliance on out-of-state adjusters could lead to delays and miscommunication.
Behind every claim number is a human story—and that applies not only to homeowners but also to the adjusters and agents who work around the clock to help them.
Susman, himself an active broker, describes the emotional exhaustion that comes with guiding hundreds of clients through catastrophic loss. "It's draining," he says, "but this is why we're here. This is the moment insurance is meant for."
Adjusters, too, face burnout. Many are brought in from other states during "cat" (catastrophe) events. Having handled multiple disasters over their careers, some become desensitized—not out of callousness, but as a survival mechanism.
This lack of empathy, though understandable, can frustrate claimants already navigating trauma. Patience and clear communication are essential on both sides.
If your home has suffered wildfire damage—no matter how minor—file your claim immediately. As Susman emphasizes, "This is what insurance is for. This is go time."
He reminds homeowners not to hesitate even with partial damage, such as smoke exposure or air quality concerns. The insurer will send professionals to assess and test the environment—services that are included in your policy.
For the uninsured, the options are limited but not hopeless. Government aid through FEMA grants or Small Business Administration (SBA) loans can offer short-term help, though they rarely cover full rebuilding costs.
Susman also clarifies an often-misunderstood issue: bank "force-placed" insurance only protects the lender's financial interest—not the homeowner's. In other words, if your mortgage company added a policy for you, it won't rebuild your home after a fire.
Sadly, disaster zones also attract scammers. Susman warns of schemes ranging from fake FEMA texts to bogus contractors collecting deposits and vanishing.
He recounts how fraudsters pose as insurance "helpers" or government agents, tricking victims into sharing personal information for "claim assistance" only to steal their identities.
His advice is simple but powerful: legitimate government agencies will never cold-call, text, or email you about disaster aid. Always start from an official site like insurance.ca.gov for verified links.
The path to recovery will take years—financially, emotionally, and structurally. But amid the devastation, there's also an opportunity to rebuild smarter.
Consumers now recognize the importance of reviewing their policies annually, verifying coverage limits, and ensuring they have protection not just for fire, but for earthquake, flood, and loss of use.
As Susman reminds listeners, "Insurance isn't about what's likely to happen—it's about what could happen."
California's wildfire catastrophe is more than a natural disaster—it's a national wake-up call. From global reinsurance markets to local construction crews, every layer of the economy feels its aftershocks.
The lesson is clear: preparedness isn't optional anymore. Whether through better policies, stronger infrastructure, or greater awareness, we must all play a part in building resilience.
As Karl Susman says, "Everyone needs to step up and do what's right—to help people, help the city, help the state, help the country—because we're all connected in recovery."
