A wildfire settlement is a private, negotiated agreement between you and the company responsible for the fire, resolving your claim without a trial.
In contrast, a court award is a non-negotiable amount of money ordered by a judge or jury after a trial concludes.
While a settlement frequently offers a faster, more certain resolution, a court award holds the potential to be higher, especially if a jury decides to award punitive damages to punish a corporation for its reckless conduct.If you have a question about recovering your losses after a wildfire, we are here to help you understand your options. Contact the Bernheim Law Firm at (800) WILDFIRE.
Key Takeaways for Wildfire Claims
- Settlements offer a faster, more certain financial recovery. This path avoids the risks and lengthy timeline of a trial, getting you the funds needed to rebuild sooner.
- Court awards have the potential for higher payouts, including punitive damages. A jury may award more for emotional distress and may punish a utility's reckless behavior, but there is a risk of losing and receiving nothing.
- Your insurance payout is only a starting point and does not cover all your losses. A legal claim is necessary to recover full damages, such as emotional distress, diminished property value, and underinsured costs, from the negligent company.
Why Your Insurance Payout Is Often Just the Starting Point
An insurance check provides a sense of immediate relief, offering the funds to address urgent needs like temporary housing and replacing personal belongings. It is an important first step. However, for many families and business owners, this initial payment represents only a fraction of what is truly needed to rebuild.
There are numerous types of losses that insurance policies frequently place low limits on or exclude entirely:
- Full Replacement Cost: Your policy might pay the "actual cash value" of your home, which accounts for depreciation. This leaves a significant gap between the check you receive and the actual price of rebuilding your home to its previous standard with modern materials and labor costs.
- Landscaping and Property Value: The fire may have destroyed mature trees, gardens, fences, and outbuildings. These features contribute significantly to your property's value, but their restoration costs are commonly capped at a very low amount in a standard homeowner's policy. The diminished value of your land itself is another loss insurance rarely covers.
- Emotional Distress: The psychological toll of losing your home, your sense of security, and your community is a very real loss. The anxiety, trauma, and sleepless nights that follow a disaster have a profound impact on your well-being, yet this is a category of damage that insurance does not compensate for.
- Lost Income and Business Interruption: If you worked from home or your local business was destroyed, the financial disruption is even greater. While some policies have limited coverage for business interruption, it may not be enough to sustain you through the long process of re-establishing your livelihood.
The Two Paths to Full Compensation: the Difference Between a Settlement and a Court Award
Once you decide to pursue compensation beyond your insurance policy, you will be faced with a central choice in the legal process: pursuing a negotiated settlement or taking your case to trial to seek a court award.
While most wildfire cases are ultimately resolved through a settlement, the strength of those negotiations comes from our preparation and readiness to go to trial if a fair offer is not made.
What Is a Wildfire Settlement?
A settlement is a formal, private agreement to resolve your legal claim in exchange for an agreed-upon sum of money. This resolution is reached through structured negotiations between your attorneys and the legal team representing the corporation and its insurers. The entire process happens outside of a public courtroom.
Several key characteristics define a settlement:
- Control: You and your attorney have the final say. No settlement is ever accepted without your express approval. You maintain control over the decision to accept an offer or continue moving toward trial.
- Certainty: The outcome is predictable. Once a settlement amount is agreed upon, you know exactly what you will receive. This eliminates the risk of losing at trial and potentially receiving nothing for your non-insurance-covered losses.
- Speed: Settlements are almost always resolved faster than a case that proceeds through a full trial and the subsequent, and lengthy, appeals process. This means receiving the funds you need to rebuild your life months or even years sooner.
- Privacy: The terms of a settlement, including the financial details, may be kept confidential. For many families, the ability to resolve their claim without a public trial is a welcome relief.
What Is a Wildfire Court Award?
A court award, also called a judgment, is the outcome of a trial. A judge or jury listens to the evidence presented by both sides and then makes a final determination of who is at fault and the amount of compensation the defendant must pay. This is a public process that unfolds in a courtroom, involving witness testimony, expert analysis, and legal arguments.
A court award has its own distinct characteristics:
- Public Accountability: A trial and its verdict are part of the public record. For many communities, seeing a corporation held accountable in a public forum provides a sense of justice that a private settlement does not.
- Potential for Higher Payouts: While not guaranteed, a jury may be more inclined to award higher amounts for non-economic damages, such as pain, suffering, and emotional distress, after hearing firsthand testimony about the human impact of the fire.
- Punitive Damages: This is a category of damages unique to a court award. Punitive damages are not meant to compensate you for a specific loss. Simply put, they are awarded to punish a defendant for particularly reckless or malicious behavior and to deter that company and others from similar conduct in the future.
- Risk and Time: This path carries substantial uncertainty. A trial is a long and demanding process, and there is no guarantee of success. It is possible to go through the entire trial and lose, receiving no award at all. The process takes years to complete.
A Warning About Utility Company Claim Portals
In the days and weeks following a major wildfire, you may see advertisements or receive notices from the responsible utility company directing you to an online portal to submit your claim. These websites are presented as a fast and easy way to get help.
You should proceed with extreme caution. Using these portals without legal guidance is a serious mistake that jeopardizes your ability to recover fully. These portals are a tool designed by the company's lawyers to serve the company's interests. Their purpose is to gather information, manage claims efficiently from their perspective, and ultimately limit their own financial exposure.
When you use them, you risk several pitfalls:
- You may sign away your rights. Buried in the fine print of the terms and conditions, there could be waivers or releases that prevent you from taking any further legal action. If you later discover that your losses are far greater than you initially thought, you may have forfeited your right to pursue additional compensation.
- You could undervalue your claim. The portal will ask you to list your losses, but without a comprehensive accounting of all your damages—including future costs, diminished property value, and non-economic losses—you are likely to enter a number that is far too low. This leads to accepting a quick, lowball offer.
- You provide them with information. Every piece of information you submit, every document you upload, and every statement you make is used by their legal team to build a case against you. They may look for ways to argue that your own actions contributed to your losses, thereby reducing their liability.
How We Build a Case Designed to Maximize Your Recovery
Our purpose is to build a case so thoroughly documented and clearly argued that the responsible corporation and its insurers recognize that offering a fair and comprehensive settlement is in their best interest. Should they refuse to do so, we are fully prepared to present that powerful case to a jury.
We Document Every Loss, Not Just the Obvious Ones
A successful claim begins with understanding the true, total cost of what was taken from you. This goes far beyond a simple list of destroyed property. We work with a network of independent professionals who help us calculate the full scope of your losses, leaving no stone unturned.
- Property Appraisers and Contractors: These professionals determine the real-world cost of rebuilding your home and other structures to their former state, factoring in current labor and material prices, not outdated estimates.
- Forensic Accountants: For business owners or those who worked from home, these experts meticulously calculate lost income, business interruption losses, and future lost earning capacity.
- Arborists and Land Restoration Experts: They assess the value of lost timber, orchards, and mature landscaping, as well as the significant costs associated with preventing future soil erosion and restoring the health of your land.
We Investigate to Prove Corporate Negligence
We conduct a deep investigation to uncover evidence showing the fire was preventable and occurred because a utility company failed to operate safely. This involves proving the company did not follow established safety rules and industry standards, which means they could be liable for any damages that resulted from their negligence.
Examples of corporate negligence in wildfire cases typically include:
- Poorly maintained power lines, transformers, and other electrical equipment.
- Failure to properly clear trees, branches, and other vegetation around high-voltage lines.
- The reckless decision to keep power lines energized during predictable high-wind, high-risk weather events.
We Calculate the Damages Your Insurance Policy Ignores
This is where pursuing a legal claim makes a huge difference. Our work focuses on identifying and placing a value on the deep, life-altering losses for which an insurance policy offers no compensation.
- Emotional Distress and Trauma: We work to demonstrate the very real impact of the fire on your mental and emotional health—the sleepless nights, the anxiety, the loss of a cherished way of life, etc.
- Evacuation Costs and Disruption: We document the true financial costs of being displaced from your home for weeks or months, including temporary lodging, increased food costs, and other expenses that quickly add up.
- Health Impacts: We establish the connection between the fire and subsequent health problems, such as respiratory issues from prolonged smoke inhalation or the worsening of pre-existing conditions.
Are Wildfire Payouts Taxable?
For the most part, the portion of a settlement or court award that compensates you for the loss of your home and property is not considered taxable income.
This is based on a provision in the U.S. Tax Code, specifically 26 U.S. Code § 1033, which deals with involuntary conversions. Simply put, the law allows you to defer paying taxes on any "gain" you might realize from your property loss, provided you reinvest the funds in a replacement property within a certain timeframe. For a federally declared disaster, this period is typically four years.
However, other portions of an award are usually taxable. This includes compensation for lost income, interest paid on the award, and any amount designated as punitive damages. Punitive damages are always considered taxable income by the IRS.
Frequently Asked Questions About Wildfire Claims
How long will my wildfire case take?
Most large-scale wildfire lawsuits involving multiple victims are resolved through a comprehensive settlement within two to three years. A case that must proceed to an individual trial takes significantly longer.
Do I have to go to court?
It is highly unlikely. The vast majority of our clients' cases are resolved through a negotiated settlement. Our primary goal is to prepare a case so strong and well-documented that the other side is compelled to negotiate a fair resolution without the need for a trial.
How much does it cost to hire the Bernheim Law Firm?
We handle wildfire cases on a contingency fee basis. This means you pay no upfront costs or attorneys' fees. We are paid only as a percentage of the recovery we secure for you. If we do not win your case, you owe us nothing.
What if I was a renter and didn't own the property?
Renters file claims and recover compensation for significant losses. This includes the full value of all lost personal belongings, the costs of displacement and finding new housing, lost wages, and the emotional distress caused by the fire.
Can I still file a claim if I already accepted an insurance check?
Yes. Accepting a payment from your own insurance company does not prevent you from pursuing a legal claim against the corporation that caused the fire. Your legal claim is designed to recover all the losses your insurance policy did not cover, including your deductible, underinsured amounts, and non-economic damages.
Let Us Handle the Fight For Your Future
You have already been through an unimaginable ordeal. Rebuilding your life is difficult enough without the added stress of a complex legal process. The path to a full recovery begins with understanding your rights and exploring all of your options. The Bernheim Law Firm handles cases for families and businesses throughout California and the West. If you are ready to take the next step, call the Bernheim Law Firm now for a no-cost, confidential consultation at (800) WILDFIRE.