Infomarine On-Line Maritime News - $2B lottery winner among investors buying up lots after LA County fire — when selling after a disaster is your best move

In the meantime, former residents have mostly settled into temporary housing. While some residents were able to move back into their homes, others are reported to be still negotiating with their insurance companies, waiting for environmental reviews of their lots or, if they’re lucky, beginning the reconstruction process.

“I’ve never been in this situation before so it’s been step-by-step, figuring out all the what-ifs,” Carl Fromm, a retiree from Altadena, told WSJ.

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Options for homeowners after a disaster

The what-ifs can be a major stumbling block for anyone trying to rebuild after their home is destroyed.

Filing an insurance claim after a disaster can be a lengthy process, and as the Los Angeles Times reports, many insurers are scaling back their coverage in disaster-prone areas like California.

Once you report the details of your claim, an insurance adjuster will investigate and determine how much the company will pay out. This process can take several months or years, depending on how many others are filing claims, and the complexity of your case.

However, the L.A. Times notes that in California, if your home was completely destroyed in a state of emergency event, the insurance company was required to immediately pay out a minimum 30% of the estimated value of your belongings, that proportion will increase to 60% in 2026 as part of new legislation (3), and at least four months average rent for the area in which you live. You are also allowed to ask your insurer for cash advances for your living expenses.

After your claim is filed, ensure you have a paper trail with detailed notes and dates for when you communicated about your claim. Keep your bills and receipts handy so they can all be claimed. You can also apply for aid from government programs like the Federal Emergency Management Agency (FEMA) and other state-specific or need-specific organizations. (4)

Rebuilding

Once you have an understanding of how you’ll be reimbursed by your insurance company, you can choose to rebuild your home on your lot. Note that a third-party or public adjuster can work on your behalf to ensure you get the full value of your policy, for a fee. (5)

As you choose contracting companies, your insurance provider may share a list of preferred vendors, but you should opt to do your own research as well to ensure you get both the best price and quality work.

You should also understand what type of insurance you have: If you have a replacement cost policy, the insurance company may pay for a rebuild of a comparable home. If you have an actual cash value policy, you’ll receive the current value of your home and its contents, which may be lower than the actual cost of replacement.

Selling your lot

For some homeowners, the cost of rebuilding can be much more than their insurance payout. Others can’t wait for months or years to receive the payout, then wait even longer for a new home to be built. In these instances, cutting losses and selling the lot can be the best choice.

You have the option to sell your land as is, without clearing it of debris — leaving the cleanup to the buyer. However, developers who buy land in this condition may give you a lower offer in consideration of the work they will have to do to make it ready to build on. You may be able to get a higher price if you invest in having the land cleared yourself.

In any case, be sure to do your research and get a number of quotes from redevelopers to ensure you’re getting the best price for the land. Opportunistic developers may try to lock you into a limited-time deal or use other high-pressure sales tactics, but taking your time is crucial in these cases.

You should also know that if you don’t sell but choose to hold onto your vacant lot, you’ll still be on the hook for your property taxes, and any maintenance or liability concerns. You may also still owe payments on your mortgage, even if your property was completely destroyed. However, your insurance company may communicate directly with your lender in order to make mortgage payments.

And, while under most circumstances an insurance claim could mean your rates will increase for up to seven years, a claim from a natural disaster should not affect your rates, by law. If your rates do increase, you should contact your insurance company, and if needed, an attorney who specializes in insurance law.