The devastating wildfires in the Los Angeles area could trigger business interruption insurance claims from policyholders far beyond Southern California, McGuireWoods partner Kirk Pasich told the Los Angeles Business Journal in a Jan. 20, 2025, story.
Pasich, co-leader of McGuireWoods’ insurance recovery team, said businesses will continue to have claims as long as the disaster impacts their operations.
“What happens in California has economic effects and insurance implications beyond Los Angeles. Most of corporate America has a form of business interruption insurance that covers interruptions of customers and suppliers,” said Pasich, who is based in McGuireWoods’ Century City office. “To the extent they can’t get business or can’t deliver their business, they would have insurance claims. Those would be outside of the Los Angeles area. The magnitude (of this disaster) isn’t known yet.”
Pasich said the frequency of natural disasters in California is taking a toll on the state’s insurance market.
“It’s certainly not going to get better,” he said. “All of these climate issues are going to make insurance more expensive with less coverage that is narrower in scope and harder to get.”
But some entrepreneurs might see an opportunity to break into the insurance market in the aftermath of the fires, the LABJ noted.
“If you were selling insurance, you might say to yourself, ‘How often are we going to have a once-in-a-century event?’ Palisades just burned down. What’s the chance it’ll burn down next year?” Pasich said. “It may actually be economically desirable for companies to sell insurance in those areas for some time.”
For more information about McGuireWoods resources to support those who have experienced loss in the wake of the Los Angeles wildfires, click here.