Los Angeles wildfires estimated to cause $28 billion in insured losses

Catastrophe risk modeling firm KCC has estimated insured losses of approximately $28 billion from the ongoing wildfires in Los Angeles, making them the costliest wildfires in U.S. history.

The fires, which started on January 7, have scorched an area nearly the size of Washington, D.C., killed 28 people, and damaged or destroyed nearly 16,000 structures, according to California’s fire department.

Both U.S. and European insurers are expected to face significant catastrophe-related claims stemming from the disaster. The $28 billion estimate includes damage from the fires themselves, as well as losses from smoke, time-element impacts for residents in evacuation zones, guaranteed replacement cost coverage, and demand surge, KCC noted in its report.

These types of losses are typically covered by standard insurance policies.

Insurers have already been impacted by rising claims related to wildfires and other natural disasters over the past few years. The Palisades Fire burned nearly 24,000 acres across the Santa Monica Mountains and surrounding towns, while the Eaton Fire scorched over 14,000 acres across the Angeles National Forest and neighboring towns.

On Wednesday, Verisk also projected potential losses from the wildfires to range between $28 billion and $35 billion.