CRMBC CEO Kaya Stanley explains the impact of the California wildfires on insurance costs and warns how the crisis could affect other states.
The devastation from the ongoing wildfires in Southern California is expected to break property loss records, with an estimated 12,000 structures already burned.
With thousands of victims losing their homes, homeowners insurance in the state has been a major focus since the disaster began last week. But what about those who lost their vehicles to the fires?
Scorched cars and burned-out homes destroyed by the Palisades Fire are seen along the Pacific Coast Highway in Malibu, California on January 10, 2025. (VALERIE MACON/AFP via Getty Images / Getty Images)
It all comes down to what type of policy the owner has on the vehicle.
Robert Passmore, the Department VP of Auto and Claims at the American Property Casualty Insurance Association (APCIA), told FOX Business in an interview that there are two kinds of coverage for damage to a vehicle.
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“That is collision coverage, for when you hit something or another object or another car, and then there’s comprehensive coverage, which is for pretty much everything else that can happen to your car – things like floods or a tree falling on it, or it gets hit by lightning, it burns up in a fire,” he explained. “So if you have comprehensive coverage on your car, then your loss would be covered under your auto policy.”
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Passmore said most of the vehicles damaged in the fires that have been burning in the Los Angeles for the past week are going to be total losses, noting, “There’s no repairing a car that’s been in one of these fires, usually.”
He said that people with comprehensive coverage whose vehicles are totaled by the fires will be paid the market value of the vehicle at the time of the loss – before it was burned.
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Passmore said that typically when disasters such as floods or wildfires occur, most people use their cars to escape, but some vehicles are often left behind, given that many households own more vehicles than they have drivers.
Chimneys stand among the rubble after the passage of the Palisades Fire in Pacific Palisades, California, on January 8, 2025. (AGUSTIN PAULLIER/AFP via Getty Images / Getty Images)
He said that one issue that can slow down a claim in the instance of a fire is if the title of the vehicle is destroyed, because that documentation is needed for processing. However, if the owner’s title is lost – say, because it burned in their home – the insurance company can assist them in applying for a duplicate title.
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Passmore said many people keep their titles in a safe deposit box at a bank, or in a strong box in their home that they can take with them if they need to flee.