California-wildfires-2018-economic-impact

How the California Wildfires Will Affect Businesses in the Golden State

Everyone has seen the massive devastation of the 2018 California wildfires in the news. It has been tragic witnessing entire communities go up in flames. Thousands of California families lost their homes, businesses, everything. Too many people even lost their lives. As far as the economy is concerned, the effects will certainly be felt well beyond California’s borders.

It is estimated that more than 200,000 people have been displaced as a result of the devastating fires.

The Camp Fire in Northern California and the Woolsey Fire in the South have decimated nearly 230,000 acres of land, leaving many without homes as their entire life’s work has been destroyed. It goes without saying that this is a trying time for many business owners as well. Even businesses outside of California will feel the effects as many did last year with the Tubbs Fire in Santa Rosa. Supply chains are directly impacted and since California is the world’s 5th largest economy, businesses worldwide will feel a direct economic impact.

This hits at one of the highest sales periods of the year: the holiday shopping season. Amazon has at least one distribution center outside of Sacramento that has been closed, with no timeline for reopening. Many businesses that weren’t directly impacted by the fire are closing because of poor air quality. Some retail shops have had their entire inventories covered by ash particles. Power outages and internet outages are also causing negative impacts to local businesses, big and small.

In October of 2017 alone there were $10 billion dollars of insurance claims resulting from wildfires. $1 billion of those claims were directly from California businesses and commercial properties. This “new normal” could cause insurance premiums to skyrocket in the coming decades as the wildfire season becomes longer and more destructive.

Many businesses found that they were underinsured, the costs of rebuilding were too great and that caused many local businesses to close shop indefinitely. Many costs associated with wildfires are not accounted for. Besides rebuilding structures and replacing inventory there are a great number of additional costs that accrue over time. Architect planning fees, rebuilding fences and parking lots, tree removal and restoring utilities are all things that may not be included in insurance payouts. Sometimes for a smaller business it is overwhelming, making it an impossible feat for many business owners to fully reestablish their small business. Keeping track of these expenses; which ones will and will not be covered by insurance can be a daunting task.

Helping employees who were likely impacted by the fires is another problem business owners must take into account. Sometimes if the commercial property is unaffected by the fires, it is likely that many of the employees have lost their homes, or worse. Helping those employees could be one of the greatest challenges for a business. For many, losing everything in a fire leaves you without a starting point. How do you rebuild your life after everything is lost?

Luckily, the generosity from Californians has shown to be great in times of dire need. There are many charitable organizations that have donated more than just food, clothing, temporary housing and other life essentials. Crisis counselors have been made available along with legal counsel to help people in the overwhelming task of rebuilding their lives. While some larger corporations can afford a comprehensive insurance coverage, small businesses can be impacted the worst, as many simply cannot afford every type of insurance coverage they may need for a disaster as great as these wildfires.

Along with dealing with the after effects of the fires, there are many available resources to help small, local businesses prepare for the worst. The Insurance Institute for Business & Home Safety have partnered with the National Fire Protection Association to offer resources and information on creating community preparedness.

The Firewise USA Program is a great resource for tips on reducing the impact of fires and other natural disasters.

Although these fires have been devastating to California communities, families and the economy, a fire can be an opportunity to paint a fresh picture and thrive. While it is never easy to come to grips with life-altering natural disasters, we can look to the future to build a better, more resilient California community.

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How the California Wildfires Will Affect Businesses in the Golden State.
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How the California Wildfires Will Affect Businesses in the Golden State.
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The 2018 wildfires in California will have a lasting impact on local businesses and the global economy.
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