When wildfires sweep across California, they leave behind more than scorched earth—they leave uncertainty, heartbreak, and complex insurance decisions. Thousands of families each year face the same agonizing question: Should we rebuild or move on?
In a recent NBC Bay Area segment, Karl Susman, insurance expert and host of Insurance Hour, helped wildfire survivors understand what their homeowner's insurance truly covers, how payouts work, and what to consider before deciding whether to rebuild. His insights cut through the confusion many homeowners face after disaster strikes—especially when emotions, finances, and policies collide.
This post unpacks those lessons, explaining what every wildfire survivor (and every California homeowner) needs to know about navigating insurance claims after catastrophe.
Recovering from a wildfire isn't just about rebuilding structures—it's about rebuilding lives. Homeowners who've lost everything are forced into rapid decision-making while dealing with insurance complexities, construction delays, and emotional exhaustion.
As Karen Collins from the American Property Casualty Insurance Association explained in the NBC segment, the recovery timeline can be long:
"It typically takes a number of months—or even a couple of years—to secure permits, find contractors, and complete rebuilding."
That estimate often surprises survivors who expect a faster payout and return to normalcy. Unfortunately, in the real world, even the best insurance coverage can't overcome California's housing shortages, contractor backlogs, and permitting bureaucracy.
This is where understanding your policy—and your options—becomes critical.
After a wildfire, policyholders usually face two main paths:
Rebuild on the same lot, or
Use insurance proceeds to buy or build elsewhere.
The instinct for many is to "start fresh" in a safer community. But as Karl Susman emphasized, that decision has major implications for your payout.
"As long as you are putting yourself back in a home, you should be getting the same type of recovery from your insurance company," Susman explained. "But if you choose not to rebuild or repurchase, your payout could be reduced."
Most homeowner's insurance policies are designed to replace what was lost—not simply issue cash. This principle is called "indemnification"—the goal of returning you to the financial position you were in before the loss, not providing profit or optional liquidity.
So, if you opt to sell your lot and move elsewhere without replacing the home, your insurer may only pay out the actual cash value (ACV)—the depreciated amount—rather than the full replacement cost. That difference can mean tens or even hundreds of thousands of dollars.
Even after total destruction, the bank still plays a role if there's an outstanding mortgage. Because the home serves as collateral for your loan, the mortgage lender is listed as a payee on your insurance claim.
Susman clarified this step:
"If you had a mortgage, you're going to have to involve your bank. That's not a brick wall—it's just another step."
Practically speaking, this means your insurer's check is often made payable to both you and the mortgage company, requiring dual endorsement. The lender's interest must be satisfied before you can access the remaining funds.
While this can delay immediate rebuilding or relocation, it ensures that debt obligations are cleared and financial accountability remains intact.
One of the most overlooked aspects after a total loss is that—even if your home is gone—your land still has value.
Insurers and homeowners sometimes forget that insurance covers the structure, not the dirt it sits on. Your lot may retain substantial market value, particularly in California where buildable land remains scarce.
When evaluating your total recovery, this land equity should factor into your financial decision-making. Selling the lot may reduce your rebuilding costs or fund relocation elsewhere, but it also affects your total claim strategy.
Understanding how your policy handles replacement cost versus relocation is essential before finalizing any decision.
Susman made a crucial point: insurance contracts are written to reimburse for loss, not to provide a windfall. If you choose not to rebuild, relocate, or replace your home, your insurer may view that as not fulfilling the "replacement" clause—and your payout can be limited.
"Insurance policies are designed to put you back where you were—which is in a house, not with cash in the bank," Susman said.
This clause protects insurers from overpaying for losses that aren't directly replaced. It's why documentation, communication, and intent are key. If you plan to buy a home elsewhere, make that clear in writing to your adjuster. Most insurers allow "like-kind" replacement even in a different city, as long as it's within a reasonable timeframe and value range.
Failing to communicate your plan could lead to misunderstandings—and lower compensation.
Navigating a wildfire claim isn't a one-time phone call—it's an ongoing relationship with your insurer. Karl Susman offered practical advice every homeowner should follow:
Document every conversation with your insurer or adjuster. Write down names, titles, and what was promised. Use email whenever possible for a digital paper trail.
If possible, take photos or videos of the damage—even partial remains. For total losses, recreate an inventory of belongings from memory or receipts. Many insurers provide worksheets to help.
Don't assume "no news" means progress. Check in weekly. Claims can stall due to missing forms or unclear documentation. Persistent follow-up keeps your file active.
Public adjusters, construction estimators, and consumer advocates can help you review estimates, identify missing items, and negotiate fair settlements. But always vet these professionals carefully—especially after major disasters, when scammers often appear.
Wildfire claims can take months—or even years—to resolve. Stay engaged. Track rebuilding timelines, permitting progress, and disbursement schedules. Patience, paired with persistence, is the formula for recovery.
While insurance is your primary source of recovery, federal and state programs can fill gaps. The Federal Emergency Management Agency (FEMA) offers:
Individual Assistance Grants for temporary housing, repairs, or personal property losses not covered by insurance.
Disaster Loans through the Small Business Administration (SBA), available to both homeowners and renters.
These programs are designed to supplement, not replace, private insurance. Applying early and providing documentation of your insurance claim can accelerate approvals and prevent overlap.
Residents can find resources, application links, and real-time updates on recovery zones through NBCLA.com, as noted in the report.
Even if your home hasn't been affected, the wildfire crisis underscores a bigger reality: every Californian lives with exposure. The best time to prepare is before disaster strikes.
Here are proactive steps every homeowner should take:
Review your policy annually. Ensure your coverage limits reflect current construction costs, not the market value of your home.
Add extended replacement cost coverage. This provides a buffer—typically 25–50% above your dwelling limit—to cover post-disaster inflation.
Consider ordinance or law coverage. It pays for code upgrades required when rebuilding.
Store digital copies of your policy, receipts, and photos in a cloud-based location.
Create a wildfire action plan, including evacuation routes and an emergency fund.
Preparedness today prevents panic tomorrow.
Wildfire recovery isn't just a test of endurance—it's a test of clarity. Understanding what your policy promises (and what it doesn't) can make the difference between frustration and financial stability.
As Karl Susman reminded viewers, the goal of insurance is to restore, not reward. You're not just filing paperwork; you're rebuilding a life.
"Talk with your insurance company about your options," he urged. "Keep records of your calls, and keep track of who promises what—and when."
In the uncertain months following a wildfire, that diligence is your greatest asset. Because while policies can rebuild homes, only persistence and informed decisions rebuild futures.
