The 12,300 structures destroyed in the fires still raging in Los Angeles include numerous restaurants, shops and local landmarks. Many owners have already filed insurance claims, and a growing number of entrepreneurs across the country are researching how much their insurance will cover in the event of a weather-related disaster.
“Until the appraiser goes in and sees what’s gone, we’re really at a loss,” said Paul Rosenblu, co-owner and operator of Fox’s Restaurant, the Altadena diner that was destroyed in the Eaton Fire. It’s like that,” he said.
There are probably a lot of companies that thought they had more (coverage) than they had.
Douglas Heller, Director of Insurance, Consumer Federation of America
Days after the fire broke out, Rosenblu told NBC News that she wasn’t confident she could rebuild in the area. But once a property loss is booked, the insurance company’s response can be as simple as “please, thank you, good luck,” he said Thursday. His coverage includes general liability insurance as well as property insurance, which typically covers financial losses from a variety of causes.
Many small business owners could face a harsher reality, experts warn.
“I can say with confidence that there are a lot of companies that thought they were going to get more (coverage) than they had,” said Douglas Heller, insurance director for the Consumer Federation of America, an advocacy group. spoke.
Heller said the insurance crisis occurring across California is mirrored in many places across the country. Increasingly, business owners are faced with a patchwork of expensive coverage and overtaxed government programs, and they are struggling to fill some of the gaps, ultimately leaving many policyholders in the lurch. You will be forced to stand.
“The risk is increasing and no one wants that,” he said.
Rosenblu and other wildfire victims may have reason to be optimistic. This is because fire damage is generally covered by most business owners’ insurance policies. However, entrepreneurs who have recently survived various types of disasters have not been so lucky.
After Hurricane Helen hit western North Carolina in October, Erin Smith, owner of Humanite Boutique in Bryson City, was forced to close for eight days after two inches of water filled her women’s clothing store. said. She said she was shocked to learn from her carrier that her small business insurance policy included general liability coverage, but not business interruption. I would have needed flood insurance for that, but I didn’t realize that when I bought it.
“This was my first flood,” Smith said. “Nobody had flood insurance.”
Allianz’s annual survey of businesses, insurance brokers and risk consultants released this month found that climate change jumped to fifth place among the top concerns in 2025, up from seventh last year. This is the highest ranking in 14 years. history. According to the National Oceanic and Atmospheric Administration, there will be 27 natural disasters in the United States in 2024 that will cause damages of at least $1 billion, second only to 28 recorded in 2023.
This was my first flood. No one had flood insurance.
Erin Smith, owner of Humanite Boutique, Bryson City, North Carolina
On the other hand, many small business owners are paying more for insurance policies they don’t fully understand. J.D. Power found that 36% of entrepreneurs saw their insurance premiums increase last year, outpacing the 34% increase in 2023, with more than half of those increases coming from carriers. A 2023 survey by insurance company Hiscox found that nearly three-quarters of small and medium-sized businesses said they did not know what coverage would typically be covered by their employer’s insurance, and 83% said they would not be covered by general liability insurance. They responded that they were unable to accurately explain the scope of liability coverage.
“Like a lot of homeowners, there are a lot of businesses that are stunned after a catastrophe occurs,” Heller said. “Four years ago, they might have had a broker who said to them, ‘Oh, if we get rid of this, we’ll save some money.'”
Smith is the first to admit that the finer points of commercial insurance are “not my area of expertise.” Still, she wishes carriers had better communicated options and plan details.
Smith’s boutique is open for business again, but this month she learned she may need to completely replace the flooring. She said it could cost $30,000 on top of the thousands of dollars in cosmetic water damage.
While looking for another lifeline, the Federal Emergency Management Agency directed her to apply for an Economic Injury Disaster Loan (“EIDL”). The loan will provide eligible businesses with up to $2 million in working capital after a major disaster, as well as one year of deferred payments. But Smith said she is still paying off previous EIDL debt incurred during the pandemic.
“I can’t. It doesn’t work for me,” she said. “I’m glad I believed it would work out.”
Fellow Bryson City resident Isaac Herrin faced a similar dilemma when Herrin liquidated more than $20,000 worth of inventory from his retail store, Sera Collection. Herrin, who is renting the space, said he has business contents insurance, which is a type of coverage to repair or replace property. But his claim was denied because the store’s landlord didn’t have flood insurance, he said.
“I tried to go back and have a discussion” with the carrier, he said. “This isn’t just a flood. We’ve had a hurricane in the mountains!”
Before Helen devastated the region, insurance companies viewed western North Carolina as relatively low risk. A subsequent Reuters analysis of federal data found that despite being inland and close to the Tuckasegee River, only one in 200 single-family homes is covered by the National Flood Insurance Program. The Takasetji River is at increased risk of flooding as storms become more frequent.
At least a quarter of flood claims come from designated non-flood areas, said Janet Lewis, a spokeswoman for the Insurance Information Institute, an industry group. Extreme winter weather also pushes up the numbers. Frozen ground does not absorb water, increasing the chance of flash flooding.
“Hurricane areas are only a small portion of the flooding,” she says.
Heller said small business owners need a comprehensive federal alternative to the piecemeal options currently offered. NFIP, which insures commercial buildings and real estate up to $500,000 per type of insurance, has been gaining attention recently. Like California’s FAIR program, the program has been curtailed by increasingly unstable weather. The company currently owes more than $20 billion to the U.S. government and is on the verge of exceeding its $30 billion borrowing limit. The coverage also does not include economic losses resulting from business interruption.
Project 2025, the Republican policy blueprint, has been disavowed by President-elect Donald Trump and recommended privatizing the NFIP, even though the transition team is using the initiative for staffing purposes. His supporters are monitoring President Trump’s inauguration on Monday. A spokesperson for Trump’s transition team did not respond to a request for comment.
Heller pointed to insurance legislation introduced by then-Rep. California Democrat Adam Schiff promoted it last year as a model for giving insurance companies effective coverage, encouraging them to take on more risks and preventing them from retreating from disaster-prone areas. But the bill has seen little movement in Congress and is not expected to gain traction amid the upcoming power changes in Washington.
“We need the government to make sure the product is genuine, high quality and affordable for businesses so that (insurance companies) can take that risk,” Heller said. “Oversight of the homeowners insurance market is limited by the regulators who are supposed to protect us, but it is even more limited for companies.”