Reed Smith In-depth

Key takeaways

  • The immediate insurance focus of the L.A. wildfires is on fire damage, but fire-affected soil and mud pose additional risks
  • Fires create hydrophobic soil under lost properties or near remaining structures, affecting recovery and raising liability if runoff damages neighboring properties
  • Standard homeowners policies typically exclude coverage for mudslides and landslides, but in California, fire coverage may apply if the fire is the “efficient proximate cause” of the resulting damage

The aftermath of the ongoing Los Angeles wildfires has left countless homeowners grappling with devastating losses and innumerable questions related to insurance coverage. While the immediate focus has been on insurance claims arising from the fire damage, the wildfires’ impact on soil and mud – compounded by impending rainfall and numerous local flood watch alerts – poses additional problems for policyholders. This alert provides an overview of these issues, lessons from past disasters like the Santa Barbara mudslides in 2018 and actionable steps for policyholders to take to prepare for the next phase of recovery.

The impact of wildfires on soil and mud

Wildfires can drastically alter the composition of soil, creating hydrophobic (water-repellent) layers, which can last for months or even years after a wildfire. These layers prevent water absorption, increasing the risk of flooding and mudslides during subsequent rain events. In the Los Angeles area, the combination of steep terrain and wildfire-damaged soil has exacerbated these risks. For instance, the Pacific Coast Highway in Los Angeles has faced multiple closures in recent years due to mudslides following major wildfires, disrupting transportation and highlighting the severe impact of compromised soil stability in wildfire-affected areas. These closures serve as a stark reminder of the cascading effects that wildfires can have on both infrastructure and local communities.

A study by the U.S. Geological Survey reveals that post-wildfire landscapes are at their most vulnerable during the first two years after a fire. According to the California Department of Forestry and Fire Protection, nearly 37,000 acres of land have burned in Los Angeles County from the Palisades and Eaton fires alone, placing many neighborhoods in high-risk zones for debris flow.

For policyholders with total property losses, this means their land may now be compromised by hydrophobic soil, making rebuilding efforts more complex and expensive. For policyholders whose structures remain standing near the burn scars, ensuring there is sufficient insurance coverage for natural disasters caused by rain is crucial.