Unprecedented wildfires brought sudden devastation and loss to Southern California homeowners in January. The two largest fires burned approximately 40,000 acres, destroyed more than 16,000 mostly residential structures, and killed at least 29 people. The fires caused an estimated $250 billion in economic losses.
The CAI Greater Los Angeles Chapter held a webinar in February offering tips on navigating the aftermath featuring Ryan Gesell, CMCA, CIRMS, with Cline Agency Insurance Brokers in Los Angeles, attorney Lisa Tashjian with Beaumont Tashjian in Agoura Hills, and April Barlow, owner of SERVPRO of Burbank, a cleanup and restoration provider.
Immediate Actions
As communities begin wildfire recovery efforts, safety is the priority, experts say. Hazards like water damage from firefighting efforts and toxic compounds in the ash present threats not visible to the naked eye. “Don’t let residents back into the community until it’s officially cleared,” says Barlow. Companies specializing in testing for dangerous elements can ensure the environment is safe for rebuilding efforts.
Working with Insurance
As wildfire recovery efforts are underway, many homeowners will rely on the the FAIR Plan to assist in the rebuilding. Originally set to run out of funds in March, California’s last-resort insurance provider, which is backed by a pool of insurers required by law to provide fire insurance to property owners who can’t find insurance elsewhere, recently announced that it would impose an additional charge of $1 billion on insurance companies, according to CalMatters. This funding is expected to provide relief to property owners in emergency situations.
Often a point of frustration during any community crisis, the insurance market is likely to get more challenging following the fires. “You’ve got to get in line as fast as you can,” says Gesell. “We don’t have enough adjusters to deal with that amount of loss.” Given the unprecedented level of damage, patience is essential. Insurance companies are overloaded, and timelines for adjustments are significantly longer. “Whatever timeline your insurance adjuster says, double it,” warns Barlow.
Resident Requests
After a disaster, many communities may face requests to defer or relieve assessments. Despite the inclination to say “yes,” remember “your board has a responsibility as a business,” notes Tashjian, a fellow in CAI’s College of Community Association Lawyers. “Before you say yes, assess ongoing costs and how long the rebuild will take.” Reducing payments might offer residents immediate relief, but community leaders need to weigh the financial health of the association and seek legal counsel first.
Building and labor costs also are expected to soar. Labor shortages and an increased need for contractors from out of state could further raise costs and complicate rebuilding, explains Gesell.
Legal Considerations
Associations also need to consider CC&Rs, insurance policies, and the amount of sustained damage in the wake of a disaster. “It’s a very complicated process that you need to discuss with legal counsel,” says Tashjian. Depending on the level of destruction, community managers may need to get homeowner approval to rebuild. They also must research whether they can levy emergency assessments to cover the costs. “It’s important to carefully review who and where to provide money,” Tashjian explains, particularly when home mortgages are involved.
Looking Ahead
Communities in fire-prone regions should prepare for an uncertain future. “Fire hardening is key,” says Gesell. He encouraged communities to remove brush, clear flammable objects around homes, and install fire-safe mesh for attic vents. Barlow also recommends homeowners take videos documenting personal belongings to ease the claim-filing process.
Tashjian advises community leaders to carefully review governing documents and insurance policies to prepare for future fire events. Even if your community was spared this time, “you should use this as an example to scare your homeowners into getting an HO-6 (condominium insurance) policy now,” Tashjian emphasizes. These policies are relatively affordable and are essential, according to Gesell.
The immediate aftermath of a disaster brings many physical challenges and emotional devastation. Observers say it’s important to practice thoughtful leadership and try to turn painful experiences into valuable lessons.
>>If you or someone you know has been impacted by the Los Angeles wildfires, view CAI’s resources.
