California’s wildfires are likely to trigger insured losses in “in the billions of dollars”, Moody’s Investors Service estimates.

The California Department of Forestry and Fire Protection (Cal Fire) says there have been nearly 14,000 lightning strikes since a “lightning siege” on August 15 caused this month’s blazes.

More than 840 wildfires have now burned over 1.42 million acres (575,000 hectares), representing an area larger than the state of Delaware, and nearly 2500 structures have been destroyed, Cal Fire said in an update yesterday.

Moody’s says its estimated insured losses of $US1.5 billion ($2 billion) are based on 1800 structures destroyed and an average value of about $US826,000 ($1.1 million) per structure.

“The wildfires continue to burn, with total insured losses likely to be in the billions of dollars for California homeowners insurers and commercial property insurers,” it says.

Loss estimates are highly variable given the wide range of values for homes and commercial structures in affected areas in the state’s north.

“Given a strong recent recovery in the housing construction market following the coronavirus shutdown in second-quarter 2020, the increase in demand for construction labour and materials following the wildfires has the potential to lead to higher insured losses,” Moody’s says.

Home insurers are also expected to incur higher costs from additional living expense claims given around 100,000 residents have been subject to evacuation orders.

California wildfire property and casualty insurance losses reached $US13 billion ($17.6 billion) in 2018 after totalling $US12 billion ($16.3 billion) from October and December 2017 fires, Moody’s says.