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The LA fires in Eaton and Palisades have damaged or destroyed nearly 16,000 structures, while the latest fires in northern LA have already covered over 10,000 acres, placing 54,000 Los Angeles and Ventura County residents under evacuation orders or warnings. On the
"You've already paid the cost of the insurance," says Joseph Balice, counsel in the Orange County office at law firm Haynes Boone. "Now you have a loss, and it's important to do everything you can to get the most out of the money you've spent on those premiums. This is exactly why you bought the insurance, to protect and give you financial recovery in the event of a fire like this."
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Balice represents policyholders in disputes with insurance companies over what benefits they're entitled to. He knows firsthand how challenging it can be for people to get what they're owed, even in the wake of a natural disaster. Balice shares how employers can begin building their case to insurers, from loss documentation to California-specific laws to keep in mind.
Call your broker
Balice advises business owners to first call their broker, allowing them to act as an intermediary between the employer and the insurance company. He stresses that the broker should have a better understanding of what benefits the employer is entitled to.
"Part of the [broker's] services is providing claims reporting and claims advocacy," says Balice. "So the first step is always to get your claim reported and contact your broker to help and stand by you throughout the claim adjustment and submission process."
Take stock of your losses
Balice notes that there are three primary types of loss: the loss of the structure itself, the loss of the contents within the business and the money lost due to business interruption. Each category represents an opportunity for the policyholder to recover the money they have already spent and will spend trying to survive.
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For example, if a business owner's building is burned down or damaged, any costs related to repairing and rebuilding the structure must be documented and presented to the insurance company. As for the contents, Balice underlines the importance of photographing or identifying receipts that prove what equipment, machinery and inventory have been damaged during the fires. Under the category of business interruption, policyholders should consider any purchases they've made to keep their businesses running, like a generator or even extra labor.
"If you have overtime for certain employees who are having to come in and work additional hours, that's going to increase business expenses to help maintain or minimize the interruption to the business," says Balice. "Those can be recovered under your business interruption policy."
Business owners should document canceled orders, payroll records and emails from clients emphasizing how finances have been impacted. Balice stresses that any purchase on behalf of the affected business at this time should be documented. He encourages employers to work with forensic accountants or attorneys to help document and present that loss to the insurance company.
Don't forget California coverage laws
California courts don't agree with all existing policy exclusions employers may find in their insurance policies. For example, Balice notes that most insurance policies exclude any damage caused by "earth movement" that results from a fire, such as mudslides and landslides. However, California courts have held that coverage still exists when a fire destroys the land on a slope, followed by severe rainfall, resulting in earth movement.
Balice also points out that the state may issue orders to suspend or extend policy deadlines or relax reporting requirements, like the state insurance commissioner did during the onset of the COVID-19 pandemic.
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"Policyholders are not always aware of those expanded rights and are not advocating for them," says Balice. "And insurance companies don't always volunteer that information. You may actually have more rights beyond what's stated in your policy."
Balice advises business owners not to shy away from taking advantage of their brokers or other insurance experts at their disposal. He reminds them that they have earned any financial relief their insurance policy and state laws offer them.
"Insurance can't stop the fire from happening," says Balice. "But if you're diligent and detailed in presenting your claim, then at least it can help you put your life and business back together after the fact."
