Facing Financial Anxiety: L.A. Wildfire Victims Struggle During Recovery

Alicia Kalvin awoke the morning of Jan. 7 to an urgent text from a friend: “There’s a fire on your street.” She hurried outside, alarmed to see red skies and low-flying planes dumping water.

“I have to get out of here,” thought Kalvin, 53, who lives in the Pacific Palisades of Los Angeles.

Back inside, she glanced out the bathroom window and saw a hellish scene unfolding. It was a neighbor’s house engulfed in flames, embers spewing into her own yard.

Kalvin frantically threw on clothing. She grabbed her purse, her dog, a can of dog food and her mother’s ashes before fleeing her childhood home. She didn’t get an evacuation warning.

Flames licked the hills of the Los Angeles enclave as Kalvin drove away. She says she’s had nightmares ever since.

Three days later, she returned to the area with a police escort.

“I promised myself I wouldn’t look, but of course I looked,” said Kalvin. “It looks like 10 nuclear bombs went off. The whole neighborhood was just leveled — markets, churches, schools. It looked like a war zone.”

In one sense, Kalvin is lucky because her home, somehow, is still standing.

But questions about her financial future abound — as they do for thousands of L.A. residents whose lives were upended by the recent wildfires.

There’s significant damage to Kalvin’s home. Some sections of the exterior, including the roof, are scorched; the landscaping and artificial lawn are destroyed; the interior smells of smoke; and ash, blown in through broken windows, blankets the hallways, Kalvin said.

She’s trying to untangle what her home insurance policy — the California FAIR plan, the state’s insurer of last resort, which steps in when residents can’t obtain coverage elsewhere — might cover.

“I’m very concerned at how much I’m going to have to spend if and when I fix up this house,” said Kalvin, who is single and doesn’t have kids. “Because insurance won’t cover everything.”

Even before the Palisades Fire, Kalvin faced financial challenges.

Work has dried up in Hollywood in recent years; Kalvin — an educator hired to teach child actors on television, movie and commercial sets — has had trouble finding gigs. She collects unemployment some weeks and funds income shortfalls with savings originally earmarked for retirement.

“My future is very up in the air,” she said. “And the uncertainty is very unsettling.”

The recent wildfires that erupted in Greater Los Angeles — fueled by hurricane-force winds and exceptionally dry conditions, exacerbated by climate change — are estimated to be among the costliest in U.S. history. They’ve killed at least 29 people.

AccuWeather estimates the blazes caused more than $250 billion in total damage and economic loss.

S&P Global Ratings projects the L.A. fires will cause roughly $40 billion of insured losses. That sum would exceed the roughly $13 billion of the Camp Fire in Paradise, Calif., in 2018, which was the costliest blaze in U.S. history.

“There are all sorts of costs associated with a disaster,” said Andrew Rumbach, a senior fellow at the Urban Institute who studies household risk to natural hazards and climate change.

“They pile up, and many Americans don’t have a [financial] cushion to rely on,” Rumbach said. “Our main way of dealing with that as an economy is going into debt. That lingers for a long time.”

The fires, largely contained, were still burning as of Thursday.

The blazes — the largest being the Palisades and Eaton Fires — have scorched more than 50,000 acres, an area exceeding the size of San Francisco, and destroyed more than 16,000 structures.

Most of those structures have been residential houses, S&P Global Ratings analysts wrote in a recent note.

The disaster pushed thousands of L.A. residents into one of the nation’s most expensive housing markets overnight. They were left with countless financial questions, compounding deep emotional scars: Considerations like where to live, how to clean up, whether to rebuild — and how to afford it all.

“Individuals are dealing with insurance, mortgages, the replacement cost of belongings, temporary housing,” said Sam Bakhshandehpour, 49, who’s lived in the Pacific Palisades for 13 years. “There are lots of near- and long-term variables and frankly there are no answers right now.”

Bakhshandehpour, an investment banker turned…