The wildfires in Los Angeles have caused widespread destruction, with more than 40,000 acres burned, 12,300 structures destroyed and thousands displaced. According to AccuWeather’s estimates, the financial impact is between $250 billion and $275 billion and counting.

President Joe Biden recently declared, “I told the governor and local officials to spare no expense,” pledging federal support for the disaster response. With FEMA and other organizations providing emergency assistance, this destruction still raises the crucial question: Who pays for it?

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As Business Insider reports, the federal government covers immediate response efforts, including fire containment and emergency shelters. FEMA provides displaced families with hazard mitigation and financial assistance, but these programs are not designed to completely rebuild homes or businesses. Because of this, private insurers and residents are largely on their own.

However, insurance coverage is becoming a major hurdle. Companies like Allstate, State Farm and Farmers have it has recently stopped covering in high-risk areas, citing increased disaster risks. Many residents rely on California’s FAIR plan, the state’s insurance program of last resort. This often results in higher premiums and less comprehensive coverage, leaving homeowners with high out-of-pocket costs.

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For uninsured residentsrebuilding is not only challenging, but economically damaging. And while state and local governments offer some support, long-term recovery depends largely on personal finances and private contributions.

The story continues