I’ll add a bit of context for those who may not be familiar with some of the details being asked here.
A typical homeowner’s policy will have the premium generally determined by the replacement cost for the dwelling–often referred to as “Coverage A” and the technical term often used to describe what’s included in this amount is “real property” (think “real estate” for the use of the term “real”). So the settlement of a claim for real property is generally based on the actual cost incurred to repair or replace (as is the case for the wildfire claimants). For some insurers, a policy whose Coverage A amount is “close enough” to the estimated replacement cost of the dwelling are given a automatic extension of an additional 20% of their Coverage A limit in the event of a total loss.
Included in this cost is a percentage of Coverage A–typically 50%–to coverage losses to personal property. which is usually more than sufficient to account for any personal property–often referred to as “Coverage B”, and this is usually property that is easily removed from the location.
There is sometimes coverage offered for “unattached structures”–things like a detached garage, storage shed, gazebo, etc. The premium charged in the first paragraph above will also include a percentage of Coverage A–typically 20 to 25%–to cover these structures.
Typically, the settlement of claims for loss of personal property and unattached structures is done on an Actual Cash Value (ACV)–that is, the current value of the item–so it’s important to know what was lost and how old it was at the time of loss.
There are additional coverages that are also extended, but these are often limited to a fixed dollar amount (think a couple thousands of dollars in total), so we can ignore that for the most part.
The above “simplification” of the underwriting of a risk is to prevent the requirement of every customer to go through an “itemization” of contents to be covered. Rather, this takes place when a claim occurs. And has been this way for a very long time.
So the DOI making the ask they are, just because there’s a lot of people in a concentrated area needing to “jump through hoops” for their claims, is pretty preposterous and isn’t going to help the supply of insurance coverage going forward.
FWIW, I don’t see any reason that the insurance companies will pay out the Coverage A limits for a total loss of the dwelling (this is pretty obvious).
I can see the ask for insurance companies to settle the claims for the personal property at some fraction of the Coverage B limits (say 40% of that limit) and waive the need for presenting an itemized list.
But I don’t see any reason to settle claims for the unattached structures without some degree of itemizing the structures and their approximate dates.
Giving claimants 120% (or 140% if they qualify for that 20% extension described above) as a starting point should be more than enough to “alleviate the initial stress” of trying to recover (and this is in addition to the policy generally covering the cost of alternate living arrangements until the claim on the dwelling is settled).
But I don’t see there being the need to provide “full policy limits” for all coverages afforded by the policy for the policyholder’s lack of planning.