INSURED LOSSES TOP $845 MILLION
More than 10,000 claims have been filed so far for property losses as a result of the deadly and destructive Carr and Mendocino Complex fires
Residents and business owners have filed more than $845 million in insurance claims as a result of this summer’s Carr and Mendocino Complex wildfires, the first data on what’s likely to be a massive bill from a series of blazes that have hit the state this year.
The startling tally comes less than a year after the devastating Wine Country fires in October totaled $10.4 billion in losses, mak- ing them the costliest wildfires in U.S. history.
This year, more than 10,000 insurance claims have been filed for property losses as a result of the two Northern California fires, which damaged or destroyed more than 8,800 homes, 329 businesses and more than 800 private autos, commercial vehicles and other types of property, Insurance Commissioner Dave Jones said Thursday morning.
Those numbers are likely to climb as claims are adjusted and more people file with their insurers, Jones said.
“The worst may be yet to come,” Jones said, noting that wildfire season peaks in the fall. “The problem is growing. The risk is growing. The trajectory is in the wrong direction.”
The news came as another major fire broke out in Northern California Wednesday. The Delta fire, north of Redding in Trinity National Forest, has grown
“Most people mistakenly believe that it will cost to replace what it cost when they bought it on themarket. Often, the cost of replacement can exceed the market value of the home.” — Dave Jones, Insurance Commissioner
to 15,000 acres and threatens hundreds of structures.
The mounting losses are profound: On Thursday, Jones also updated data for the fires that erupted during a windstorm last October, destroying more than 7,000 buildings in at least eight counties across Northern California and killing 43 people.
Property owners in Sonoma and Napa counties filed for $7.9 billion and $1.5 billion in damages, respectively, in the October fires. That $9.4 billion in claims from the two counties is a slight increase from the $9 billion reported last December. The 1991 Oakland Hills fire had previously held the record, with $1.7 billion in insured losses.
Fires trigger other expensive natural disasters, Jones said. Residents, business owners and others have filed more than $736 million in insurance claims as a result of the Montecito mudslide in January, which destroyed more than 152 homes and 11 businesses, Jones said.
The claims outlined Thursday underscore the unprecedented destruction California has endured over the past two years. Confronted with losses, insurers are increasingly opting to not renew some policies, or are declining to write insurance policies for highrisk homes, Jones said.
He urged homeowners to do three things: Review your policy, get a preliminary estimate from your insurer of the replacement cost, then talk to a contractor to get the actual cost of replacing your home. He recommended buying insurance that exceeds the replacement cost by 25 to 50 percent, because “surge pricing” after a fire can inflate the cost to rebuild. The demand for materials and labor causes prices to go up, he said.
“Most people mistakenly believe that it will cost to replace what it cost when they bought it on the market,” he said. “Often, the cost of replacement can exceed the market value of the home.”
Property losses are just part of the cost of wildfires. Last year, California state agencies spent nearly $1.8 billion to fight wildfires. On Thursday Cal Fire director Ken Pimlott wrote state lawmakers asking for $234 million more to fight fires this year. He said the agency spent $432 million through the end of August and had only about $11 million left.
And there are additional costs associated with damage to utilities, roads and business closures. .
“It cost $25 (million) to $30 million to suppress the fire, but the overall economy lost closer to $50million,” said Patrick Reitz, chief of the Idyllwild Fire Protection District, which fended off last July’s Cranston fire in the San Jacinto Mountains of Riv- erside County. “We were without electricity; about 200 power poles had to be flown in by helicopter and hand dug, to replace. Caltrans had to replace guard rails and signs. Roads were closed. And there were costs to local governments, through lost tourist and utility taxes.”
Jones also released a new report, “Trial by Fire: Managing Climate Risks Facing Insurers in the Golden State,” which describes how climate change is a contributor to wildfire losses in California.
“We are simply not doing enough, fast enough to get ahead of this problem,” said Jones.
Climate change doesn’t cause wildfires. But it increases the likelihood and intensity. Advances in computer modeling allow scientists to make quantitative connections between ex- treme weather events and climate change, and climate change is making large wildfires more common because global warming has increased dry fuel, turning trees and grass into tinder.
But rising damage costs are partly because of demographic shifts and development decisions that make natural disasters more destructive. People ignite the vast majority of fires, compared to those caused by natural processes like lightning strikes. And more and more people are building homes on lands bordering wildland areas in parts of the state suspectible to fires. For example, in California, 3.6 million of the state’s 8 to 9 million housing units are located in areas more at risk of wildfires.