Rebuilding After the Palisades Fire
Practical insurance guidance for homeowners in year two of the recovery.
The Palisades fire displaced thousands of families, and the recovery is still underway. This page is intended as practical, plain-language help with the insurance side of rebuilding — not a sales pitch. If you are in the middle of it, you are welcome to call and ask questions whether or not you are a client.
As of the most recent public reporting, the City of Los Angeles had received over 6,600 rebuilding applications and issued more than 3,100 permits across the Palisades and Eaton fire areas, with over 3,090 building and electrical permits approved in Pacific Palisades alone. Rebuilding is happening — slowly, and unevenly.
The underinsurance problem, stated plainly
The hardest lesson from this fire is that a great many destroyed homes were underinsured — public reporting and industry analysis put the shortfall at 20% to 50% or more for a large share of California wildfire total losses. In the Palisades specifically, reporting has described average payouts falling roughly $600 per square foot short of a realistic rebuild.
The mechanism was rarely bad faith at the point of sale. Replacement-cost estimating tools systematically understated what it costs to rebuild a custom home in a constrained, high-demand market — and after a disaster, demand surge pushes labor and materials well above the modeled figure. Litigation over this is ongoing.
The practical takeaway for anyone rebuilding or re-insuring: do not accept a dwelling limit generated by a tool without checking it against a real local builder's number. This is the single most valuable thing you can do.
Coverages that matter most in a total loss
- Extended replacement cost. An endorsement paying a percentage (commonly 25%–50%) above your dwelling limit. In a demand-surge rebuild this is what closes the gap. Ask for it explicitly on any new policy
- Building code / ordinance and law. Current code costs more than the code your home was built to. Rebuilding to today's wildfire standards is a real, separate expense
- Additional living expense (ALE). Check your limit and your time limit. Palisades rebuilds are running well beyond the 12–24 months many policies assume
- Debris removal. Frequently a sublimit rather than a full additional amount
- Contents. Replacement cost, not actual cash value, and inventory before you need it
If a carrier has non-renewed you since the fire, our non-renewal guide covers the sequence, and the FAIR Plan is the fallback most rebuilds use.
Insuring a home under construction
A rebuild is not covered by an ordinary homeowners policy. During construction you generally need a builder's risk policy covering the structure and materials on site, plus confirmation that your general contractor carries their own general liability and workers' compensation — verify the certificates rather than assuming.
If your contractor is a licensed California contractor they also carry a contractor license bond; that bond protects against certain license-law violations and is not a substitute for their liability insurance. Confirm both.
Smoke damage and homes that survived
Not every loss was a total loss. Homes that survived may still have smoke and ash damage, which is generally a covered peril under a standard policy but is frequently disputed on scope — what needs cleaning versus replacing, and whether HVAC and insulation are included.
Document everything, keep every estimate, and do not feel obliged to accept a first scope of repair that does not match what your remediation contractor is telling you. If you are dissatisfied with how a claim is being handled, the California Department of Insurance accepts consumer complaints and it is worth using.
Why were so many Palisades homes underinsured?
Replacement-cost estimating tools understated the cost of rebuilding custom homes in a constrained market, and post-disaster demand surge pushed labor and materials higher still. Public reporting describes average payouts falling roughly $600 per square foot short of a realistic rebuild, with shortfalls of 20%–50% common in California wildfire total losses.
What is extended replacement cost and should I have it?
It pays a percentage above your dwelling limit — commonly 25%–50% — when rebuild costs exceed the policy limit. After what this fire demonstrated, it is worth asking for explicitly on any California home policy, particularly in a wildfire area.
How long does additional living expense coverage last?
Check both the dollar limit and the time limit on your specific policy. Many assume 12–24 months. Palisades rebuilds are frequently running longer than that, so the time limit is as important as the dollar figure.
Do I need special insurance while my home is being rebuilt?
Yes — generally a builder's risk policy for the structure and materials during construction. You should also verify your general contractor's own general liability and workers' compensation certificates directly rather than assuming they are in force.
My home survived but has smoke damage. Is that covered?
Smoke and ash damage is generally a covered peril under a standard policy, though the scope of repair is often disputed. Document thoroughly, keep all remediation estimates, and escalate to the California Department of Insurance if a claim is being handled unreasonably.
Related pages
California FAIR Plan
The fallback most rebuilds use.
Learn more →Non-Renewed? Your Options
If you were dropped after the fire.
Learn more →Insurance in Malibu
The other extreme-risk Westside market.
Learn more →Home Insurance
Rebuilding a policy from scratch.
Learn more →This page is general information for California consumers, not legal, tax, or financial advice, and not an offer of coverage. Rates, rules, and carrier appetite change frequently — figures shown are typical ranges as of mid-2026 from public sources. Your own premium and eligibility depend on your specific situation. Confirm current requirements with the [California Department of Insurance](https://www.insurance.ca.gov/) or talk to a licensed agent. Express Financial & Insurance Services, Inc. is an independent brokerage in Santa Monica, CA — call 310-453-5736 for a no-obligation review.