A Home Lost, A Claim Denied
When a devastating wildfire swept through Northern California in 2022, one homeowner thought their fire insurance policy would help them rebuild. They had paid premiums for over a decade and expected the claims process to be straightforward. Instead, their fire insurance claims encountered delays, increased scrutiny, and an eventual partial payout that barely covered half the cost of rebuilding.
Across California and other wildfire-prone states, home and businessowners are finding that filing a fire insurance claim is no longer as simple as it once was. Insurers, struggling with mounting wildfire losses, are changing how they evaluate and process claims. Stricter documentation requirements, increased deductibles, longer wait times, and a rise in claim denials are leaving many policyholders in financial distress—even when they believed they were fully covered.
The Growing Burden of Fire Insurance Claims
California wildfires have cost insurers billions of dollars in recent years. The 2018 Camp Fire alone resulted in over $8.4 billion in insured losses, making it the most expensive wildfire in U.S. history until the 2025 fires. The 2025 Wildfires have resulted in $12 billion in insured losses. As wildfires become more frequent and destructive, insurers are taking drastic steps to manage their financial risk including minimizing claims payouts and delaying claims.
- Longer Claims Processing Times
After a major wildfire, insurance companies are overwhelmed with claims, leading to delays that can last months or even years.
- In 2020, following the devastating wildfires in Oregon and California, claims processing times increased by an average of 60%, according to the California Department of Insurance.
- Many homeowners reported waiting six months or longer just to receive an initial damage assessment.
Insurance companies, facing a surge in claims, often lack the resources to process them quickly. Some have outsourced claims handling to third-party adjusters, which has led to inconsistent evaluations and underpayments.
- Stricter Documentation and Increased Denials
One policyholder who lost their home to a wildfire submitted a claim, only to be asked for detailed documentation of everything lost, from structural damage to personal belongings. Unfortunately, many of their records had been destroyed in the fire.
- More than 40% of wildfire-related insurance claims are now being denied or underpaid, according to a report by the United Policyholders advocacy group.
- Insurers are increasingly requiring before-and-after documentation of homes and possessions, making it difficult for homeowners to prove their losses.
Some insurers have even denied claims on technicalities, such as:
- Homeowners not maintaining defensible space around their properties.
- Claiming that damage was due to negligence rather than the fire itself.
For homeowners who assumed they were protected, these denials can be devastating.
- Higher Deductibles and Partial Payouts
Even when claims are approved, homeowners are often shocked to find that they will not receive a full payout.
- Many insurers have introduced wildfire-specific deductibles that are much higher than standard home insurance deductibles.
- Deductibles of 5-10% of a home’s insured value are becoming common—meaning that for a home insured for $500,000, the homeowner might have to pay $25,000 to $50,000 out of pocket before receiving insurance funds.
- Some insurers have switched from replacement cost payouts to actual cash value (ACV), factoring in depreciation and significantly reducing claim payouts.
For homeowners already struggling with post-disaster recovery, these financial burdens can make rebuilding nearly impossible.
How Homeowners Can Protect Themselves
With insurers tightening their claims policies, homeowners must be proactive in their claims process. Here’s how:
- Document Everything
Since insurers are requiring more proof of loss, homeowners should:
- Photograph and video-record their home, inside and out.
- Create and keep a digital inventory of personal belongings with purchase receipts and estimated values.
- Keep notes of all encounters with your insurance company including any insurance adjusters that contact you.
- Proactively Working Through Delays and Underpaid Claims
If a claim is delayed or denied, policyholders should:
- Hire a licensed and bonded public adjuster to objectively assess your policy and the damages you have suffered. A public adjuster represents the owner of the property—NOT the insurance company—and is an advocate to ensure you receive all the funds to which you are entitled.
- Fully understand all of your available coverages. Again, a licensed claims professional on your side can critical to identify all coverage and policies that may provide funds to help you rebuild.
- File a complaint with the state insurance commissioner if the insurer is acting in bad faith.
- Cooperate Fully with the Insurer
- Stay in regular contact with your insurance adjuster via email and phone.
- Provide documentation and information that the insurance company requests
- Ask for specific reasons for any delays and what is needed to move the process forward.
- If the adjuster is unresponsive, contact their supervisor.
The Future of Fire Insurance Claims Management
As wildfire risks increase, the claims process will continue to evolve. Insurers are already investing in AI-driven damage assessments and drone inspections, which oftentimes do not properly identify the full scope of damage or the amount you are owed to rebuild. These advancements may also result in even more scrutiny and challenges for homeowners and businessowners seeking fair payment for their fire damage.
Regulators are stepping in with new laws requiring faster claim processing and fairer payout assessments, but the system remains complex. In 2023, California’s Insurance Commissioner ordered major insurers to speed up claim processing after growing complaints about delays and underpayments.
For homeowners, the key to navigating this new reality is preparation and persistence. Understanding policy changes through the use of a professional advocate like an experienced public adjuster, can make the difference between receiving a fair payout and being left financially stranded.
Final Thoughts
Fire insurance claims are no longer as simple as filing paperwork and waiting for a check. With longer processing times, stricter documentation requirements, and higher deductibles, homeowners must be proactive in protecting themselves when a disaster strikes.
Gavnat has a library of resources for navigating your fire claim. View these free resources to help with the claims management process here.