What Happens When Insurance Isn’t Enough After a Wildfire?

After a wildfire, many homeowners learn that their insurance won’t cover the full cost of rebuilding. So, what happens when your insurance payout doesn’t come close to making you whole? That’s where a third-party wildfire claim can make all the difference.

Understanding the Insurance Shortfall

Every homeowner’s policy has coverage limits — the maximum amount your insurer will pay for certain types of damage.

Let’s say your policy covers $100,000 for real property damage, but rebuilding your home costs $500,000. That leaves a $400,000 gap — money you’ll need to rebuild but won’t get from your insurance company.

This difference is called the insurance shortfall. And in nearly every wildfire case we handle, there’s some level of shortfall between what the insurance pays and what the client truly lost.

How a Third-Party Claim Helps

If a utility company, contractor, or other third party is found responsible for causing or failing to prevent the wildfire, you may be able to recover that shortfall through a third-party wildfire claim.

In simple terms, your third-party claim seeks to recover the difference between your actual losses and your insurance payout.

Using our earlier example:

• Cost to rebuild: $500,000

• Insurance coverage: $100,000

• Shortfall (claim amount): $400,000

That $400,000 becomes your real property damages claim against the responsible party.

Why This Matters

Insurance is designed to help — but it’s rarely enough to make you whole after a large-scale disaster like a wildfire. Rebuilding costs, supply chain delays, and code upgrades can all drive costs far beyond your policy limits.

A third-party claim helps bridge that gap, ensuring you’re not left with the financial burden of someone else’s negligence.

The Bottom Line

If your insurance coverage doesn’t come close to covering your true losses after a wildfire, you still have options. Through a third-party wildfire claim, you can pursue compensation for the full value of your damages — not just what your insurer decides to pay.

Our team works to document your losses, calculate the shortfall, and fight for every dollar you’re owed so you can rebuild your home and your life.