What to do if home insurance settlement is too low?

If you need to dispute a low settlement offer from your insurance adjuster, start by contacting your insurance claims department. Get professional help. If the insurance company and its insurance claims adjuster have undervalued your claim, you should immediately contact a lawyer to review your case. When a homeowners insurance claim is denied or too low, you can appeal the decision.

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Table of Contents

1. Review Your Insurance Policy

2. Assessing the Value of Homes in Wildfire Areas

3. Request a Detailed Breakdown of Your Settlement Offer

4. Negotiate with Your Insurance Company

5. Consider Filing a Dispute

Final Thoughts

1. Review Your Insurance Policy

The first step is to thoroughly review your homeowner’s insurance policy. After the Malibu Fire burned through entire neighborhoods, many homeowners discovered that their dwelling coverage limits were insufficient to rebuild their homes at today’s construction costs. Be sure to check whether your policy covers replacement cost or only actual cash value (ACV)—the latter accounts for depreciation, which can significantly reduce your payout. If you need assistance understanding your policy and how to challenge a low payout, our fire insurance attorney or our California wildfire attorney can provide expert guidance.

Insurance policies often have detailed clauses that dictate the limits of what they will pay in the event of a disaster. Homeowners may assume they have full coverage, only to find that their policy contains exclusions, sub-limits, or outdated valuations that do not reflect current market conditions. It is crucial to scrutinize the fine print, paying close attention to whether your policy includes extended replacement cost coverage, which provides additional funds if rebuilding costs exceed your policy limits. Many homeowners affected by the Altadena Fire have found themselves underinsured due to rising labor and material costs. Seeking help from our fire insurance claim lawyer or our fire damage insurance claim attorney can help you determine the best course of action.

2. Assessing the Value of Homes in Wildfire Areas

The California Department of Insurance (CDI) has released claims payment data showing that insurers have already paid out more than $4.2 billion in claims for damages caused by the Eaton and Palisades wildfires. The Palisades Fire primarily affected high-value properties, where many homes were appraised at $3 million or more before the disaster. Homeowners in this area have faced significant challenges, as insurers have often used outdated valuation metrics, leading to payouts that do not match the current market value. Some Palisades Fire victims have reported receiving only 60-70% of what they need to rebuild, forcing them to take out loans or sell their land. Our LA fire attorney can help homeowners challenge these unfair settlements.

In Altadena, where homes ranged from $800,000 to $1.5 million, insurance companies have struggled to keep pace with increasing construction costs. Many homeowners have noted that their policies, written years ago, no longer reflect the true cost of rebuilding, especially with local regulations requiring more fire-resistant materials. If you are facing a similar issue, our Altadena fire lawyer or our Altadena fire attorney can assist you in negotiating a fairer settlement.

The Eaton Fire burned through communities with homes valued between $600,000 and $1.2 million, many of which were older structures with unique architectural elements. Homeowners here have had difficulty securing full payouts due to insurance companies depreciating the value of older materials and historic features, reducing settlement amounts drastically. Our Eaton fire lawyer and our Eaton fire attorney specialize in handling such claims and can help ensure you receive the compensation needed to restore your home.

The Malibu Fire swept through a region where properties often exceed $5 million, many of them luxury homes. Homeowners here have encountered significant pushback from insurers reluctant to pay the full replacement cost for high-end finishes and custom-built features. Several victims have had to hire independent appraisers to fight for accurate valuations that reflect the true luxury market. Our California fire lawyer or our California wildfire lawyer can provide specialized legal support to homeowners in this situation.

In Topanga, where home values range from $700,000 to $2 million, many insurance policies have failed to account for increased rebuilding expenses, particularly those related to environmental protections and updated safety codes. Insurance companies have also been hesitant to pay for temporary housing, despite prolonged rebuilding timelines. Our SoCal fire lawyer or our Los Angeles wildfire lawyer can assist homeowners in navigating these delays and pushing for a rightful payout.

The Hurst Fire destroyed homes valued at $500,000 to $1.1 million, many of which were family residences. Homeowners in this area have struggled to recover due to severe underinsurance, with many policies capping coverage amounts that no longer reflect the rising costs of labor and materials post-disaster. If you are facing these challenges, our SoCal fire attorney or our fire damage insurance claim lawyer can offer valuable legal support.

3. Request a Detailed Breakdown of Your Settlement Offer

Many homeowners impacted by the Topanga Fire and the Eaton Fire have reported discrepancies in their insurance settlements. If your insurer has offered you less than expected, request a written explanation detailing:

How the value of your home was calculated
What depreciation or exclusions were applied
How construction costs were estimated

This information is critical in challenging an inadequate payout. Our fire insurance claim attorney or our California fire attorney can help you understand these discrepancies and take the necessary legal steps.

4. Negotiate with Your Insurance Company

Armed with independent estimates, challenge your insurer’s assessment if you believe it is undervaluing your home. Provide:

Recent home appraisals or comparable local home values
Itemized contractor estimates
Proof of past upgrades and improvements

With insured losses as of this writing estimated to exceed $150-250 billion, this is also potentially the largest wildfire insured loss event in US history. Following the Hurst Fire, multiple homeowners successfully negotiated higher settlements by presenting detailed evidence of their rebuilding costs. Our fire insurance attorney or our wildfire insurance attorney can assist you through this process to ensure you receive what you are owed.

5. Consider Filing a Dispute

If negotiations do not result in a fair settlement, consider taking formal action:

Request an appraisal if your policy includes an appraisal clause
File a formal complaint with the California Department of Insurance
Seek mediation or arbitration if available in your policy

Many victims of the Palisades Fire took legal steps to dispute lowball insurance payouts, leading to higher settlements after mediation. If you need assistance with the dispute process, our LA fire lawyer or our Los Angeles wildfire lawyer can provide dedicated representation.

Final Thoughts

Recovering from the January 2025 wildfires in Los Angeles will be a long and challenging process. If your insurance company is offering less than your home’s true worth, take proactive steps—review your policy, obtain independent estimates, negotiate, and seek professional assistance if necessary. Many homeowners impacted by the Palisades, Altadena, Eaton, Malibu, Topanga, and Hurst Fires have successfully fought for fair compensation—and you can too. Our California fire lawyer or our wildfire insurance attorney can be your advocate in securing the settlement you rightfully deserve.

If you need further assistance or legal guidance, reach out to our California fire attorney or our fire insurance claim lawyer for a consultation today. Don’t let the insurance companies undervalue your claim—get the compensation you deserve to rebuild and recover.

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What to do if home insurance settlement is too low?

1. Review Your Insurance Policy

2. Assessing the Value of Homes in Wildfire Areas

3. Request a Detailed Breakdown of Your Settlement Offer

4. Negotiate with Your Insurance Company

5. Consider Filing a Dispute

Final Thoughts

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