Wildfire Insurance Claims: How GoFundMe Can Affect Your Settlement

The devastation of a wildfire can leave homeowners facing immense financial challenges. While insurance is meant to be a safety net, many find themselves turning to crowdfunding platforms like GoFundMe to bridge the gap. But can your generosity in seeking help from your community impact your wildfire insurance claim settlement? The answer is complex, and understanding the nuances is crucial to ensure you receive the compensation you deserve. In 2025 alone, wildfires in Los Angeles County resulted in 29 fatalities and the destruction of over 18,000 structures, highlighting the critical need for financial support for affected families.

The Collateral Source Rule: Your Shield Against Reduced Payouts?

In many states, including California, the “collateral source rule” prevents insurance companies from reducing your settlement simply because you received outside assistance, such as GoFundMe donations. This rule acknowledges that wildfire victims shouldn’t be penalized for their resourcefulness or the kindness of others. However, this protection isn’t absolute, and several factors can influence how GoFundMe affects your claim.

How GoFundMe Can Complicate Your Wildfire Insurance Claim

While the collateral source rule offers some protection, here’s how your GoFundMe campaign could potentially impact your wildfire insurance claim:

Campaign Language and Intended Use of Funds: The way you describe your needs and how you intend to use the donations can raise red flags for insurers. If your campaign states that you’re raising money for specific repairs that are also covered by your insurance policy, the insurer might argue that those needs are already being met. To avoid this, focus your campaign on uninsured losses such as legal fees, long-term recovery support, or covering your deductible.
Inconsistencies and Misrepresentations: Be careful about the information you share on your GoFundMe page. Statements about your recovery or the extent of your injuries that contradict information provided to your doctor or lawyer can weaken your claim. Similarly, listing items unrelated to the fire or exaggerating your losses can raise suspicion.
Duplication of Benefits: FEMA (Federal Emergency Management Agency) has regulations preventing it from providing financial assistance for needs already covered by other sources, including crowdfunding. To avoid issues, be vague when creating your GoFundMe page. For example, instead of saying the funds will be used to replace a vehicle, state that the funds will help the Jones family recover from the disaster.
Impact on Public Benefits: GoFundMe donations can affect your eligibility for public benefits like FEMA, Medi-Cal, or SSI if the donations are counted as income or assets. These programs have strict income and asset limits, and improperly handled funds could reduce or disqualify your benefits.
“Double Dipping”: While receiving donations won’t automatically reduce your insurance payout, it could affect your coverage if you use it for things already covered by your policy. Insurance is designed to only cover the actual loss that you sustain. For example, if someone used GoFundMe money to rebuild their house after a fire, they couldn’t also make a claim against their insurance policy for the cost of reconstruction.

Best Practices for Navigating GoFundMe and Wildfire Insurance Claims

To minimize potential complications and maximize your chances of a fair settlement, consider these steps:

Consult with a Wildfire Attorney: Before launching a GoFundMe campaign or accepting donations, seek legal guidance from an experienced wildfire attorney. They can advise you on how to structure your campaign, word your descriptions, and manage the funds to protect your insurance claim and public benefits.
Be Transparent and Accurate: Ensure that all information you provide on your GoFundMe page is accurate and consistent with the information you’ve shared with your insurance company and legal counsel. Avoid exaggerations or misrepresentations that could undermine your credibility.
Focus on Uninsured Losses: Clearly state that the funds raised will be used for expenses not covered by insurance, such as deductibles, legal fees, uncovered property, or long-term recovery needs.
Document Everything: Keep meticulous records of all donations received and how the funds are spent. This documentation will be crucial if your insurance company or any government agency raises questions about the use of the money.
Coordinate with Your Attorney: Work closely with your attorney to manage your GoFundMe campaign and ensure that all communications with the insurance company are handled strategically.
File an Insurance Claim First: Before considering creating fundraising campaigns such as GoFundMe, it is important to determine whether there is an insured loss, and attempt to claim your insurance first to avoid double dipping.

Common Reasons for Wildfire Claim Denials

Even with a well-managed GoFundMe campaign, you might still face challenges with your insurance claim. Insurance companies may deny wildfire claims for various reasons, including:

Alleged Lack of Coverage: The insurer claims your policy doesn’t cover wildfire-related losses.
Pre-existing Damage: The insurer argues that the damage pre-dated the fire.
Insufficient Documentation: The insurer alleges you haven’t provided enough evidence to support your claim.
Lack of Maintenance: The insurer claims you didn’t adequately maintain your property.
Disputes Over Cause: The insurer disputes the cause or extent of the damage.
Policy Exclusions: Some insurance policies exclude coverage for wildfire-related damage.
Failure to Meet Policy Requirements: Another reason insurance claims may be denied is because the policyholder failed to follow the insurance provider’s rules and regulations.
Insufficient Coverage: If your policy does not provide adequate coverage for rebuilding or repairing your home after a wildfire, your claim may be denied or you may receive a lower payout than expected.
Misrepresentation on the Insurance Application: Insurers often deny claims if they discover discrepancies or misrepresentations on the original application—such as incorrect details about the property’s use, construction materials, or ownership.

If your claim is denied, don’t give up. You have the right to:

Appeal the Decision: Submit a written appeal with the insurer, including any additional evidence to support your claim.
File a Complaint: Contact your state’s insurance commissioner and file a formal complaint.
Take Legal Action: Hire an insurance attorney to pursue legal action for bad faith or breach of contract.

Understanding Your Rights as a Wildfire Victim

As a wildfire victim, you have certain rights that insurance companies must respect. These include the right to:

Fair Financial Compensation: You have the right to seek a financial recovery from your homeowners insurance policy, renter’s insurance, commercial insurance, or the insurance provider of the negligent individual or entity.
Appeal a Rejected Claim: If your insurance claim has been denied after a California wildfire, you have the right to pursue an appeal.
Remain Protected: In the immediate aftermath of a wildfire, it is important to know your rights to remain protected. This includes the right to enter an emergency shelter without discrimination, your right to have equal access to goods and services, and your right to take time off of work due to unsafe conditions.
Hold Someone Responsible: If someone else carelessly or intentionally caused the wildfire that impacted your life, you have the right to pursue financial compensation from this party for all of your related losses.

Navigating the Claims Process

Filing an insurance claim after a wildfire can be overwhelming. Here’s a general overview of the process:

Contact Your Insurer: Notify your insurance company about the damages and provide essential details.
Document Damages: Thoroughly document damages with photos and videos before any cleanup or repairs, serving as crucial evidence.
Claim Forms: Fill out the required claim forms accurately and comprehensively.
Proof of Loss: Prepare a “proof of loss” statement detailing the extent of damages and the value of lost items.
Cooperate with Adjusters: Be prepared to answer questions about the damages.
Review Your Policy: Understand the terms and coverage limits of your policy.
Negotiate: If the initial settlement is insufficient, negotiate with the insurance company and provide additional evidence if necessary.

Conclusion

While GoFundMe can provide crucial financial assistance after a wildfire, it’s essential to understand how it might affect your insurance claim settlement. By being mindful of the language you use, documenting everything, and seeking legal guidance, you can navigate this complex situation and maximize your chances of a fair recovery. Remember, you’re not alone in this process, and resources are available to help you rebuild your life after a devastating wildfire.

If you’ve been affected by a wildfire and are struggling with your insurance claim, contact our firm today for a free consultation. We can help you understand your rights and fight for the compensation you deserve.