REBUILDING V.S.
SELLING
This decision is deeply personal, but here are some big things to take into consideration:
This guide was built in partnership with AIA. fact-checked by licensed professionals and building experts. Consult a builder or architect for specifics to your situation.INSURANCE
IMPACTS
Selling could affect how much of your insurance payout you get.
If you sell without rebuilding or buying another home, it could affect how much your insurance pays out, depending on what type of coverage you have. To figure that out, pull out your policy and search for “Actual Cash Value” or “Replacement Cost Value” and click through to the breakdown that matches what you have.
We’ll also set you up with a template to email your adjuster to get some clear guidelines.
IF YOU HAVE
ACV COVERAGE
If your policy only has Actual Cash Value (ACV) coverage:
What you get: Only the depreciated value of your home (what it was worth before the fire, minus age and wear).
Even if you rebuild: You still only receive ACV.
Example: Rebuilding costs $600,000, but the insurer says your home was worth $400,000 before the fire → you only get $400,000.
IF YOU HAVE
RCV COVERAGE
If your policy has Replacement Cost Value (RCV) coverage:
If you sell and don’t rebuild or buy: You only get the ACV (the lower amount).
If you rebuild or buy another home: You unlock the full replacement cost benefits.
In California: You can rebuild on your lot, rebuild somewhere else, or buy another home, as long as you do it within your policy’s time limit (usually 2-3 years).
IF YOU HAVE ERC
If your policy has Extended Replacement Cost (ERC):
How it works: Same rules as RCV, but with an extra cushion (often 20%–50% above your Coverage A limit) to cover post-disaster cost spikes.
If you only take the cash: You still just get the ACV and code upgrade coverage.
If you rebuild or buy: You can access your full Coverage A plus the ERC extension.
Example: Coverage A = $500,000. ERC = +20% ($100,000). Rebuild cost = $600,000.
Rebuild or buy → you can get $600,000.
Walk away → you might only get $400,000 (ACV).
PUT SIMPLY
ACV: Always a reduced payout.
RCV: Full payout only if you rebuild or buy another home.
ERC: Full payout + extra cushion, but only if you rebuild or buy.
TIP:
California law (Insurance Code §2051.5) guarantees your right to use replacement cost benefits to rebuild on your lot, rebuild elsewhere, or buy a new home - but you must do so within the time limit in your policy (typically 2–3 years). Advocacy orgs (like Operation Hope) may be able to help you get this extended with your insurer.
LAWSUIT IMPACTS
Selling could impact any lawsuit settlements.
If you’re part of a lawsuit against a utility (like Edison), part of what you may be compensated for is the drop in your land’s value after the fire.
If you sell your property now for a low price, that sale could be used as evidence that the damage wasn’t as significant, possibly lowering the amount you’re awarded in the settlement.
TIP:
Selling does not automatically disqualify you from receiving compensation, but it can complicate your claim. Speak with your attorney before taking any action so they can advise on the best strategy for your specific situation.
WHAT TO ASK
YOUR LAWYER
How would selling potentially affect my settlement?
What is “diminution in value?” (If they can’t answer this, consider hiring a different lawyer.)
TAX IMPACTS
Taxes play a role.
There are disaster-related tax breaks and exemptions that are only available if you rebuild. Selling might shift your property tax situation or trigger capital gains tax, depending on your insurance payout and how long you’ve owned the home.
TIP:
If you do not rebuild, you have two years during which you can transfer your old property tax rate to a new property.
If you buy outside of that, you will be subject to the current property tax rate at that time. You can read up on Prop 19 here.
TALKING TO A CPA
Talking to a CPA familiar with disaster recovery can help you understand what to expect and how to navigate it.
Questions to ask your CPA or financial counselor:
Will selling the land trigger any unexpected taxes for me?
Are there disaster-related exemptions I might miss out on if I sell?
VALUE MAY
INCREASE
Your land may be more valuable after rebuilding.
Land value often goes up post-disaster, especially if the community rebuilds with resiliency measures. Rebuilding could improve your financial position long-term, especially if you can access group discounts that make rebuilding more affordable while maintaining your equity.
It’s also important to check the soil and air quality after a disaster, since leftover debris or fire contaminants could affect your health and your home’s value.
Getting advice from environmental experts or local agencies can help make sure your rebuilt home is safe and worth what you expect.
Questions to ask your
financial counselor
or an appraiser:
What’s the current value of my land compared to what it could be post-rebuild?
If I rebuilt something modest, would that increase resale value?
RETURNING MAY
BE HARD
Selling now might make it harder to return later.
Rebuilding is one way to maintain a foothold in your neighborhood.
If you sell now and prices rise in the future, buying back in might be tough.
There’s no right or wrong answer here - it just depends on your long-term goals.
CHECK WITH
NEIGHBORS
What your neigbors are doing matters.
If your neighbors aren’t taking soil toxicity or building with resiliency as seriously as you would want them to, that might affect how good you feel about investing in rebuilding on your lot. A great starting place is asking them what they’re thinking and making a plan together as a block that makes everyone feel safe.
If you’re wondering how to speak with your neighbors, try reaching out to your neighborhood captain.
You can find yours via the Get Help card on your dashboard.