Wildfire underinsurance: Board hears experts who point to estimator errors, call for stronger standards

The Board of Equalization held an informational hearing on May 28 focused on wildfire-related underinsurance, hearing testimony from consumer advocates, academics, builders and insurance professionals who said many wildfire victims lack sufficient homeowners coverage to rebuild.

Vice Chair Sally Lieber opened the hearing, saying she had “called for the special hearing in April after learning how many of our wildfire survivors have been systematically underinsured for the replacement value of their incinerated homes.” The panel of witnesses — including Amy Bach of United Policyholders, law professor Kenneth Klein, insurance broker David Schafer, and builder Matt Everson — described a recurring pattern: point-of-sale replacement-cost estimates and commonly used software defaults are producing figures that are too low, leaving many homeowners tens or hundreds of thousands short after a total loss.

Why it matters: Survivors who cannot fully rebuild reduce local tax rolls and can face long-term financial harm. Witnesses told the board that underinsurance after wildfires is not a rare glitch but a systemic problem that affects recovery, local budgets and community resilience.

Key findings presented - Prevalence and depth: United Policyholders said its surveys and long-term case work show a persistent proportion of wildfire-impacted homeowners are underinsured; staff and researchers cited rates “over 50%” in multiple events. Professor Kenneth Klein presented DOl-provided claims data covering recent wildfire years and summarized his analysis: roughly two-thirds of insured homeowners who suffered total losses were short of the funds required to…