The recent wildfires in Los Angeles County, particularly the Palisades Fire that ignited on January 7, 2025, have caused unprecedented destruction. As of January 28, 2025, the Palisades Fire has been fully contained, but the impact of this fire is and will continue to be profound to families and businesses alike in California. Michigan does not have the same wildfire risk as the West Coast, but wildfires still happen here, so let’s talk about this fire, its impact, and how to protect yourself and your assets from a similar situation with the proper insurance coverage.
Total Damage of the Palisades Fire
According to the California Department of Forestry and Fire Protection, the total number of structures affected by the Palisades Fire was approximately 6,837 homes and other destroyed buildings. Estimates indicate that insured property losses from the Palisades and Eaton fires range between $28 billion to $35 billion, with the Palisades Fire accounting for $20 billion to $25 billion of that total. Of course, there were thousands of houses and buildings that were not insured or underinsured, so the total financial damage for individuals and companies is much higher than these estimates.
However, these figures highlight the critical importance of adequate insurance coverage for both residential and commercial properties, whether the risk is fire, flood, high winds, drought, earthquakes, or any other potential catastrophe.
Key Coverages to Consider for Insurance Protection
When it comes to protecting your home or business from damage, having the right coverage is essential. Key insurance options to consider include:
Replacement Cost (RCV) vs. Actual Cash Value (ACV)
One of the most important decisions in property insurance is choosing between Replacement Cost Value (RCV) and Actual Cash Value (ACV).
RCV covers the cost to replace your home or business property with new materials of similar quality, without factoring in depreciation.
ACV pays out the depreciated value of the damaged property, which may not be enough to rebuild after a disaster.
Opting for RCV is often a much better choice to ensure your full recovery after a traumatic event.
Extended Replacement Cost Coverage
Standard homeowner and commercial property policies have coverage limits, but when disasters like wildfires hit, rebuilding costs can skyrocket due to the sudden demand for labor and materials to rebuild. Extended Replacement Cost Coverage offers additional funds (often 20–50% above the insured limit) to help cover these increased costs. Without it, property owners may find themselves significantly underinsured and unable to completely recover.
Insurance Limits: Are You Properly Covered?
Many homeowners and business owners unknowingly underinsure their properties, leaving them with coverage limits too low to fully rebuild. It’s essential to regularly review your policy to ensure:
✔ Your dwelling coverage matches the current cost of rebuilding
✔ Your business property and inventory are insured at replacement value
✔ Your additional living expenses (ALE) coverage is enough for temporary housing
Business Insurance Considerations
If you own a business, Commercial Property Insurance should include fire damage coverage, and Business Interruption Insurance is crucial to cover lost income while your business is closed for repairs. Without proper coverage, recovery can be even more challenging.
Our Thoughts Are with All Those Affected
We at Navisure Insurance Group extend our sympathy to all of those affected by these devastating natural disasters we’ve seen so often recently. We would like to make sure that none of our clients will ever have to realize that they were underinsured and unable to recover from a disaster, whether large or small. Now is the time to review your policy and make sure your coverage will fully protect you. Contact us at Navisure with any questions you may have, and we will do our best to match you with the proper insurance coverage for your needs.
TROY VANDERMEER | VICE PRESIDENT
Troy attended Aquinas College in Grand Rapids, MI, and obtained a degree in Business and Technology. After graduating, he began his career as an insurance adjuster for a large-scale carrier. This included almost 10 years of experience, with roles such as property catastrophe, marine, and recreational vehicle claim handling. Troy learned the ins and outs of how insurance companies operate while also perfecting the technical aspects of the industry. This gives him an edge when working with clients regarding what coverage best fits their needs. As a proponent of leveraging technology, his goal is to simplify the process of getting insured without clients having to sacrifice their time.
In his spare time, Troy coaches high school soccer, enjoys golfing, fly fishing, and spending time with his family and friends.