The fires in Gatlinburg, Tennessee, have claimed seven lives at the time of writing and several are missing in the town popular with tourists visiting the Great Smoky Mountains National Park.
With 53 people reported as injured so far and over 200 buildings destroyed, the insurance response will be an important part of the recovery effort.
However, there’s also a possibility many won’t have recourse to recover because they don’t have insurance.
“There are two apartment complexes that have burned up and a lot of people living in those complexes probably didn’t have renters insurance either,” Bill Gatewood, corporate vice president and director of personal insurance at Burns & Wilcox said.
“So they have no coverage for their personal property… you generally don’t think about it in a wildfire.”
Settling or processing claims isn’t what insurance companies are focused on in the near term, Gatewood said.
That’s because it’s too dangerous to assess the damage at this point and many residents aren’t even sure if their homes have been destroyed.
“The insurance company will be settling people into temporary places to stay,” Gatewood said.
“The additional living expense under a homeowner policy is extremely important in a situation like this because they need a place to stay tonight and for the next six months while their homes are rebuilt - and it’s something a lot of people don’t think about.”
The blaze is believed to be man-made and began Monday 10 miles south of the town, according to the National Park Service.
Given the area is a tourist attraction, there will be some commercial property claims too, though not many in comparison to the personal ones, according to Barry Whitton, managing director at Burns & Wilcox Brokerage in Atlanta.
Whitton said fire damaging restaurants and local business would likely make up a bulk of the claims, with the possibility of an evacuation order triggering a business interruption claim.
But unless they have a special policy relating to lack of attractions, shops and stores won’t get business interruption payouts due to tourists avoiding the mountainous region for their own safety.
There are, however, road closures in the affected area and, according to Whitton, those could trigger business interruptions claims.
In addition, some insurance companies are sophisticated enough to know when a wildfire is approaching their clients, and high end coverages have wildfire response teams.
“If needed they’ll cover the house in flame retardant foam,” Gatewood said. “I’ve seen cases where an entire neighbourhood was burned to the ground except for one house that was covered in flame retardant foam.”
But for those without insurance, particularly on their cabins, the fires affecting Gatlinburg could have implications lasting after the final embers are put out.
“There will be a lot of tragic stories that come out of this for sure,” Gatewood said.
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