Underinsured after a wildfire in California: closing the gap between your policy and your loss

If you are underinsured after a wildfire in California, you are in the majority, and it is not because you did something wrong. Many families learn the size of the gap only after the fire, when the insurer's rebuild estimate arrives and it does not come close to what local builders are quoting. That moment is frightening. It is also the point where knowing your rights makes a real difference.

This guide explains, as of October 2026, where the gaps usually are, the specific California Insurance Code protections that apply after a declared state of emergency, the limits of the California FAIR Plan, the free help available from the Department of Insurance, and how a claim against the utility that caused a fire can recover what your policy does not. It is general information, not legal advice about your policy.

How common is underinsurance after the 2025 fires?

Very common. In its year-one survey of Los Angeles wildfire households, United Policyholders reported in April 2026 that 69% said they were underinsured, by an average of $247 per square foot, and 61% said their insurer's replacement cost estimate was inadequate. Insurers had paid about $7.6 billion in Eaton Fire claims by November 2025, according to California Department of Insurance figures reported by CalMatters. Those payments are real, but for many households they stop well short of the cost to rebuild.

Where the gaps usually are

• The dwelling limit. Your limit was set years ago, often from the insurer's own estimate, and construction costs rose. Extended replacement cost coverage, if you have it, adds a percentage, but often not enough.
• Building code upgrades. Rebuilding to today's fire and energy codes costs more, and code-upgrade coverage is usually a separate, smaller limit.
• Belongings. Contents limits are often a percentage of the dwelling limit, so an underinsured home usually means underinsured contents too.
• Living expenses. The law sets a minimum time for additional living expenses, but many policies also have a dollar limit that can run out first, as the Department of Insurance has warned.
• Trees, landscaping, fences and outbuildings. These often have low sublimits.
• Uninsured losses entirely. Lost income, the human cost of the loss, and anything your policy excludes.

California laws that protect wildfire policyholders

California has some of the strongest post-wildfire insurance rules in the country. These apply to residential policies when the loss is tied to a declared state of emergency. The Department of Insurance summarized many of them in Bulletin 2025-2, issued January 23, 2025.

Insurance Code § 2051.5: time to rebuild, and rebuilding elsewhere

Many policies pay the depreciated "actual cash value" first and the rest of the replacement cost only after you rebuild. After a state-of-emergency loss, § 2051.5 gives you at least 36 months from the first actual cash value payment to collect the full replacement cost, with six-month extensions for good cause when delays are beyond your control. If you rebuild or buy a home somewhere else, the insurer must pay what it would have paid to rebuild at the original site, and it may not deduct the value of the land at the new location. The insurer also cannot require a proof of loss sooner than 100 days after the loss.

Insurance Code § 2060: how long living expenses last

Under § 2060, additional living expense coverage after a state-of-emergency loss runs for at least 24 months from the loss. The insurer must extend it by up to 12 more months for delays beyond your control, and further six-month extensions are available for good cause. Keep in mind the dollar limit in your policy can still run out first.

Insurance Code § 2061: advance payments and simpler inventories

For a total loss that includes living expenses, § 2061 requires the insurer, if you ask, to advance at least four months of living expenses. For a total loss of your primary home, the insurer cannot insist on its own inventory form if yours has substantially the same information, and it must accept inventories that group belongings by category when listing every item would be impractical.

Insurance Code § 10103.7: contents advances and combining limits

For a total loss of a furnished primary residence, Bulletin 2025-2 explains that § 10103.7 requires the insurer to offer an advance of at least 30% of the dwelling limit, up to $250,000, for contents without an itemized list. The same section lets you combine the limits for other structures to rebuild the main home when the dwelling limit is not enough.

Newer contents rules (SB 495)

SB 495, which took effect January 1, 2026, requires insurers to pay 60% of the contents limit, up to $350,000, without a detailed inventory after a total loss in a qualifying disaster, with the full limit available if you document it. Whether it reaches a particular January 2025 claim is a question to raise with your insurer or a lawyer. Separately, after the Los Angeles fires, the Department reported in March 2025 that most homeowners insurers had agreed to pay at least 75% of contents coverage without a detailed inventory, and some agreed to 100%. If you have not been offered that, ask why.

Insurance Code § 675.1: keeping your policy

After a total loss in a declared disaster, the insurer must offer to renew your policy for at least the next two renewal periods, no less than 24 months, according to Bulletin 2025-2. That protection matters while you rebuild.

Looking ahead, SB 876, signed in September 2026 and effective January 1, 2027, will require insurers to offer extended replacement cost and living expense coverage and to provide regularly updated replacement cost estimates. It is designed to reduce underinsurance going forward.

The FAIR Plan's limits

Many Altadena and Pasadena homeowners were on the California FAIR Plan, the state's insurer of last resort. According to the Department of Insurance, FAIR Plan residential coverage goes up to $3 million, and the residential policy is a limited fire policy. Coverage the FAIR Plan does not provide, such as liability and theft, usually comes from a separate "difference in conditions" policy from another company, which means two claims and two adjusters after a fire.

The FAIR Plan's handling of smoke claims has been challenged. In June 2025, a Los Angeles Superior Court judge ruled that two of its smoke-damage rules were illegal, and in July 2025 the Department took enforcement action alleging at least 418 violations of consumer protection laws. If a FAIR Plan smoke claim was denied, see our smoke and ash damage guide.

Free help from the Department of Insurance

The California Department of Insurance takes complaints about delays, low estimates and denials at no cost. You can file at insurance.ca.gov or call 800-927-4357 (800-927-HELP). The Department said in July 2025 that it had helped recover more than $74 million for wildfire survivors through complaint intervention. Keep copies of everything you send and receive, and put requests to your adjuster in writing.

A complaint is not a lawsuit. Your policy and the Insurance Code set a deadline to sue your insurer, and it can be shorter than you expect. If your claim is stuck or denied, have a lawyer check that deadline. We can review an insurance dispute and tell you where to turn, even when it is not a case we would bring.

Recovering the gap from the utility

When a utility's equipment causes a wildfire, the people harmed can bring a claim against the utility for their losses. Having insurance does not take that claim away; it changes who collects what. Your insurer pays you and then pursues the utility itself to be repaid. You can pursue the utility for everything your policy did not pay: the shortfall in rebuild costs, belongings, living expenses beyond your limits, lost income, trees and landscaping, and the human cost of losing a home. For the Eaton Fire, those claims are part of the Eaton Fire case against Southern California Edison.

SCE's own compensation program treats insurance differently. It subtracts your full policy limits from the economic part of its offer, even if your insurer paid less. If you were underinsured and your insurer is still holding back money, that offset can matter a great deal. Our guide to the SCE Wildfire Recovery Compensation Program explains how to weigh an offer. Deadlines matter too: property claims against SCE generally must be filed by January 2028.

Renters face different gaps; see renters' rights after a wildfire.

What to do now if you are underinsured after a wildfire

1. Request a certified copy of your full policy, including the declarations page and all endorsements.
2. Get at least one independent rebuild estimate from a local contractor, and compare it to the insurer's.
3. Ask in writing for the advance payments the law allows: four months of living expenses and the contents advance.
4. Track every expense: rent, mileage, storage, meals, replacement purchases. Keep receipts.
5. Write down each call with your adjuster: date, name, what was said.
6. Ask for extensions in writing before any time limit runs out.
7. Do not sign a release from the utility until a lawyer has read it.

How LaCour can help

We represent people affected by the Eaton Fire, GKN and Lineage events, and we focus on recovering the losses insurance leaves behind. We will look at your policy, your insurer's payments and your losses, and explain what a utility claim could add. Spanish-speaking lawyers are available. Start with a free, confidential review; there is no fee unless there is a recovery.

Frequently asked questions

This guide is general information about California and federal law and about public records as of its date. It is not legal advice, and reading it or contacting us does not create an attorney–client relationship. Allegations in lawsuits are claims, not findings. Prior results do not guarantee a similar outcome. Attorney advertising.