Losses from the Thomas Fire in Southern California are expected to fall between $1 billion and $2.5 billion, a catastrophe modeling firm said on Tuesday.
The Thomas Fire, which raged across Southern California’s Ventura and Santa Barbara counties throughout most of December, destroyed a reported 1,063 structures and damaged roughly 280 others.
It is considered the largest wildfire in California history having burned 281,893 acres.
It ranks among the top 10 among wildfires in terms of total losses, with the October Northern California wildfire on record as the state’s costliest ever with claims of more than $9.4 billion already reported.
Not only was the Thomas fire the state’s largest, but losses are likely to exceed average losses from fires that burn around 1,000 structures, according to Kevin Van Leer, senior product manager and wildfire expert with catastrophe modeler RMS.
Van Leer believes this is due to higher claims that will come from properties lying just outside the fire’s perimeter for smoke damage, claims related to additional living expenses from evacuations, business interruption and power loss.
“There’s a lot of exposure just outside the perimeters and that is likely going to result in higher than average claims,” Van Leer said.
Prior historical events that have damaged or destroyed roughly 1,000 structures, such as the 2015 Butte Fire, 2003 Old Fire, and the 2017 Atlas Fire, have produced 2 to 5 times that number in total industry claims, according to a blog outlining his estimates.
Claims counts of around 10 times the number of affected structures are possible from the Thomas fire, which Van Leer said may result in a higher than average total insured loss.
The fire also directly or indirectly impacted several commercial structures, including the destruction of the Vista Del Mar hospital in Ventura, and caused business interruption to other hospitals, oil field equipment, train services, and schools, he added.
Exposure of properties around the perimeter is only part of the reason behind the upper end of Van Leer’s loss estimates.
He said claims figures could be pushed higher as a result of the recent Northern California fires.
Media coverage from those fires may mean property owners affected by the Thomas fires are more aware that they can claim losses for things like smoke damage, according to him.
Losses are also piling up from the mudslides that hit the fire-affected area just over a week ago.
At least 20 people were killed, and hundreds of homes were destroyed or damaged on Jan. 9 when a rainstorm flushed debris flows from the Thomas fire burn scar above the town of Montecito.
RMS is monitoring the impact of mudslides, but it has yet to issue any loss estimates.
“We do not have any sort of loss estimate available right now,” Van Leer said. “With the evacuations, it is still a continuing situation to understand what is the damage is, and how those claims are going to be paid out.”
Beyond the loss totals a large question looms for insurers and regulators: Are the mudslides covered by homeowners policies, or must those losses be covered under a separate flood insurance policy?
Within that question is another, very crucial question, that Van Leer notes must first be answered: Can the mudslide be attributed to burn scar?
“If the burn scar is directly the cause or related to the mudslide then it would typically be covered under the homeowners policy,” Van Leer said. “That is a question that insurers and regulatory entities are looking into now and that is a piece that we’re monitoring.”
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