If your home was affected by the Palisades Fire, you likely have more insurance coverage than you realize. Many homeowners are unaware that their policies may include additional funds for debris removal, code upgrades, and preconstruction, architectural and engineering fees required for reconstruction. By understanding the full extent of your coverage, you can ensure you receive the maximum benefits available to rebuild efficiently and safely.

1. Dwelling Coverage & Replacement Cost Policies

This is the primary portion of a homeowners insurance policy that covers the cost to rebuild or repair the home itself. Many policies list of specific dollar amount associated with Dwelling costs, others include replacement cost coverage, which ensures that the homeowner receives the actual cost to rebuild their home, rather than just the depreciated value. Additionally, some policies offer excess coverage (often described as Home Protector, Extended Replacement Cost Coverage, Inflation Guard) in case rebuilding costs exceed initial limits:  50% Excess Policies: These provide an additional 50% of the dwelling coverage (and other structures coverage as noted below) limit to help cover rising rebuilding costs. 25% Excess Policies: These policies provide an additional 25% of the dwelling coverage limit, offering a smaller buffer for unexpected expenses.

2. Other Structures Coverage

This coverage applies to detached structures on the property, such as Unattached Garages, Sheds, Fences, Guesthouses, Patios, Driveways and sitewalls.

California is unique in allowing homeowners to combine Dwelling and Other Structures coverage if the total cost of rebuilding exceeds the dwelling coverage limits, providing greater financial flexibility.

3. Debris Removal Coverage

After a wildfire like the Palisades Fire, clearing debris and hazardous materials is a major cost. Debris removal coverage is typically a percentage of the Dwelling and Other Structures coverage rather than counting against the main policy limits. This ensures homeowners can remove rubble and begin rebuilding sooner.  If the Army Corps of Engineers completes the clean up of your property, the will seek reimbursement up to the limits of your debris removal coverage (and likely the same percentage of your other structures and personal property coverages) and any excess about your debris removal insurance limit will not be charged to the homeowner or its insurance company.   The alternative is to hire a private debris removal company, and to use these funds.  However, in the event the costs exceeds your debris removal insurance allotment, then any overage would have to be paid from your remaining dwelling and other structures coverage, thus reducing the amount of funds available for your rebuild.

4. Ordinance or Law Coverage (Code Upgrade Coverage)

If a wildfire-damaged home must be rebuilt to meet updated building codes, ordinance or law coverage helps cover the additional costs of compliance. Like debris removal, code upgrade coverage is usually calculated as a percentage of Dwelling and Other Structures coverage, providing extra funds to meet stricter building regulations.

What Does Code Upgrade Coverage Include?

• Architectural, Engineering, and Consultant Fees: These costs can be billed against code upgrade coverage since rebuilding often requires compliance with new regulations.
• Electrical, Plumbing, and Structural Upgrades: If local codes require enhanced safety measures, these upgrades are covered under the policy.
• Fire-Resistant Materials: Insurance may cover the costs of fire-resistant roofing, siding, and venting to meet new California fire safety standards.
• Energy Efficiency Requirements: Updated regulations may require solar panels or other energy-efficient installations, which code upgrade coverage may help fund.

5. Landscaping Coverage

Fire damage to trees, shrubs, and other landscaping elements may be covered under a separate portion of a homeowners policy, with limits typically based on a percentage of the dwelling coverage.  However, not that most policies have a limit of $500 per tree or bush.

6. Personal Property Coverage

This coverage compensates for the loss of personal belongings, including furniture, electronics, clothing, and other possessions. Policyholders should:

• Check if their policy provides replacement cost value (RCV) rather than actual cash value (ACV) to ensure full compensation for lost items.

7. Additional Living Expenses (ALE) / Loss of Use Coverage

When a wildfire forces homeowners to evacuate or their home becomes uninhabitable, ALE coverage helps pay for temporary housing, food, and other necessary expenses. During a State of Emergency, insurance companies may be required to offer at least 24 months of ALE coverage, even if the policy originally provided a shorter period.

8. Emergency Assistance and Fair Claims Practices

Following a State of Emergency, California law requires insurers to offer additional benefits, including:

• Advance payments for ALE and personal property claims without requiring an inventory list upfront.
• Expedited claims processing to speed up recovery.
• Waived deductibles in some cases when a total loss occurs.

Final Thoughts

Navigating wildfire insurance claims after a disaster like the Palisades Fire can be overwhelming. Understanding your policy’s coverage, including replacement cost policies, excess coverage, and percentage-based coverage for debris removal and code upgrades, can help homeowners maximize their claims and rebuild faster.