Post-wildfire rebuild premium — why ERC is essential in fire-prone counties
By Severance Calculator Editorial · Updated
The problem
When thousands of homes burn simultaneously, the regional construction industry cannot absorb the demand at pre-disaster pricing. Material costs spike (lumber, drywall, roofing) and labor goes mobile (out-of-state crews charge premium rates with relocation costs). The post-disaster premium runs 15-40% above pre-disaster rebuild cost — and Coverage A is set at pre-disaster prices.
The data
Marshall Fire (Boulder County, CO, December 2021): CO DORA analysis showed ~40% of total-loss homeowners were underinsured by 20%+ even though they had correctly-priced Coverage A pre-fire. The gap was post-disaster premium. Camp Fire (Butte County, CA, November 2018): United Policyholders documented similar systematic underinsurance. The 2025 California wildfires reinforced the pattern.
What to do
In any county with documented wildfire risk (California: most non-coastal; Colorado: Front Range and Western Slope; Oregon, Washington: WUI zones), add an Extended Replacement Cost endorsement of +25% minimum. Consider Guaranteed Replacement Cost (unlimited buffer) if available from your carrier; some carriers withdrew GRC from the California market post-2018, but several still offer it in CO and the Pacific Northwest.