Your guide to SoCal Edison's Eaton Fire payout plan

Southern California Edison recently released its payout plan for survivors of the Eaton Fire. As fire survivors navigate their recovery and decide if the program makes sense for them, LAist put together this guide to answer some of the most common questions.

We spoke to several lawyers and insurance experts, listened to two town hall meetings and asked Edison questions directly.

Edison said this program can help fill “the gap,” shorthand for the difference between how much survivors get from insurance or otherwise have to rebuild and how much rebuilding actually costs. The program is meant to cover what insurance doesn’t, not to make survivors whole.

Lawyers told LAist the program is likely to pay out less money than litigation, though it could make sense for uninsured or severely underinsured survivors who don’t have the funds or desire to wait through a longer legal process.

Ultimately, experts emphasized, the decision on how to move forward is deeply personal and unique to each survivor’s circumstance.

At a recent town hall, Edison Chief Executive Pedro Pizarro said more than 380 claims already have been submitted, with more than 180 in progress. Most survivors who have submitted so far have not used a lawyer, he said.

How does this program compare to past wildfire compensation plans? 

Southern California Edison has never provided such a program, and this one is unique among compensation programs in California, which have been carried out by one of the other three major investor-owned utilities, Pacific Gas & Electric, after the 2015 Butte, 2017 North Bay and 2018 Camp fires.

The 2017 and 2018 fires led to PG&E declaring bankruptcy, and the compensation program was administered via a trust. The program, which still is paying out survivors years later, has faced allegations of slow, low payouts and high overhead costs. That funding was limited due to the utility’s bankruptcy, so payouts were capped.

Edison says its program has no cap on payouts. Because the Edison program does not operate through a trust and the utility is not expected to declare bankruptcy, it’s hard to directly compare the programs, experts told LAist.

Where is the money coming from? Can it run out? 

Edison told LAist the first $1 billion of claims will be paid via the utility’s ratepayer-funded insurance. If claims exceed that amount, the company will seek reimbursement through the state’s Wildfire Fund, which was established in 2019 after the 2017 Thomas Fire in Santa Barbara and Ventura counties.

“The program is structured to minimize financial impact to the company while providing meaningful support to those affected,” said Edison spokesperson Gabriela Ornelas in an email to LAist.

State officials warned earlier this year that that $21 billion fund could be drained by costs associated with the Eaton Fire, which are estimated to be as high as $45 billion. In October, Gov. Gavin Newsom signed a bill to expand the fund by $18 billion. The fund had been initially paid for by the utilities’ equity and shareholder earnings, but the new law could allow Southern California Edison to shift billions of dollars of Eaton Fire costs to its customers.

Earlier this year, the state approved a rate hike to help Edison cover the ongoing costs from past fires. And the utility is seeking further rate hikes to pay for wildfire mitigation and to cover “reasonable costs of its operations, facilities [and] infrastructure.”

Who’s eligible and what’s the deadline to apply? 

Edison will accept claims from homeowners, renters and businesses affected by the Eaton Fire within an identified zone.

Property damage will have to be documented in Cal Fire’s Damage Inspection data. Properties within the fire perimeter (designated "Zone 1") and slightly beyond ("Zone 2) are eligible. You can see a detailed map of eligibility when you start a claim. (You can save your progress on the Edison website, so you don’t have to complete everything in one sitting.)

Claims will cover total or partial structure losses, commercial property loss, business interruption, homes with non-burn damage (such as smoke, soot or ash), physical injuries and deaths.

Survivors who already sold their properties are also eligible for the program (more on that below). Hedge funds and insurance companies are not eligible.

The program will accept applications until Nov. 30, 2026.

What’s the difference between Zone 1 and Zone 2? 

Zone 1 includes the original fire perimeter and is extended about 400 feet beyond it.

Zone 2 covers more properties, based on their proximity to the smoke plume, other destroyed structures and the fire’s origin, according to Edison.

There are a few elements of the program that will vary, depending on which zone your property is in. For example, no extra documentation is needed for properties in Zone 1 to receive the flat payment of $10,000 for landscaping damage.

How does Edison calculate its payout offers? 

The company says it is using a model developed by economic consulting firm Compass Lexecon, with methodology independently analyzed by RAND, to determine a property’s value and how much to pay out.

The RAND analysis states that about 20% of estimates are expected to be off by more than $200 per square foot, with about half of those errors being overestimates and half being underestimates.

“In general, the model tends to underestimate pre-fire value for … homes at the luxury, or high end, of the local market,” the report states. “It tends to overestimate value for homes … at the low end of the market or in below-average structural condition.”

You can find examples of calculations at the “View Sample Offers” tab on this page.

Pizarro said at a recent town hall that Edison’s team may add examples to the page as questions continue to arise. Below are direct links to some examples:

• Primary structure, total loss (owner, two adults, two children).
• Primary structure, total loss (renter, two adults, two children).
• Primary structure and ADU, total loss.
• Primary structure: non-burn damage – smoke, soot or ash – with landscape burn damage (owner).
• Primary structure: non-burn damage – smoke, soot or ash – with landscape burn damage (renter).

How does the program work? 

A single claim is required per household, and there are two paths for a payout: “fast pay” and “detailed review.” Every survivor is required to start with the “fast pay” option.

Edison’s “fast pay” option will provide an offer within 90 days of an applicant submitting a "substantially complete” claim. If the survivor accepts the offer, payment will be made within 30 days.

If survivors don’t feel the first offer is fair, they can choose to have a “detailed review,” which requires more steps and documentation and can take up to nine months for a payment offer. There’s no guarantee that offer will be higher. If you don’t like the "detailed review" offer, you can still accept the initial "fast pay" offer.

If survivors use an attorney to apply for Edison’s payout program, which is not required, they will receive an offer for additional compensation equal to 10% of their net damages to help cover that cost.

An insurance expert LAist spoke with recommended survivors speak with a lawyer before deciding on the claim, and ask them about establishing a “special needs trust,” which can protect survivors who rely on public assistance from losing that assistance with the payout or even insurance reimbursement.

What are the types of damages and how much do survivors get for them? 

Edison has identified three categories: economic, non-economic, and what the company is calling a “direct claim premium.”

Economic loss includes costs associated with property damage, personal property, loss of use, business disruption, business interruption, physical injury and death. Find the details for economic loss calculations on page 16 of the plan.

Non-economic loss includes fixed payments to survivors for the emotional trauma of the fire, as well as compensation for those injured in the fire or to the heirs of someone who died. Find the details for non-economic loss on page 24 of the plan.

The “direct claim premium” is a fixed amount added on top of the offer. Find the details of the direct claim premiums on page 25 of the plan.

Non-economic damages, the direct claim premium, and the 10% increase to help cover attorney fees will not be included in the insurance deduction. Non-economic damage offers also won’t change if a survivor chooses to go with the detailed review after receiving their fast pay offer.

How does the program work with insurance? 

A survivor’s entire insurance policy, regardless if they have received an insurance payment, will be subtracted from the economic losses portion of Edison’s offer, but not the non-economic, “direct claims premium,” or the attorney compensation.

Insurance companies may seek reimbursement for their costs from Edison through a process called “subrogation.” Edison has already agreed to pay one undisclosed insurance company 52 cents on the dollar for claims related to the Eaton Fire.

The offers through Edison’s program are nonnegotiable, but survivors can ask for reconsideration within 14 days of the offer, which triggers the detailed review process.

What about lawsuits? 

Accepting a payout will include agreeing not to sue Edison, the company said.

Instead of accepting a payout, survivors can pursue a lawsuit against Edison. Survivors can continue their litigation at the same time as applying for the payout program.

The first set of lawsuits against SoCal Edison are not set to go to trial until early 2027, though some may be settled before then.

How fast is this program really? 

Lawyers told LAist there are a lot of questions about the payout timeline, though they acknowledged it will almost certainly be faster than litigation.

For example, Edison determines if a claim is “substantially complete” before accepting it and launching the 90-day timeline. Furthermore, survivors have to go through that "fast pay" track, even if they have unusual circumstances and will likely require the "detailed review" track, which Edison says will take up to nine months.

Meanwhile, the first set of Eaton Fire lawsuits are not set to go to trial until early 2027, though some could be settled before then.

What about temporary housing assistance? 

At a recent webinar, Edison representatives said the plan includes three and a half years of temporary housing for single family homeowners with a destroyed residence. (See pages 18 through 21 of the plan.)

 For renters, the temporary housing assistance adds up to three months of pre-fire rent. (See pages 21 through 23 of the plan.)

If you already sold your property, how does this program value your offer?

In this instance, according to Edison representatives, the Compass Lexecon model would use your sale price plus the pre-fire value estimate. Appraisal documentation will only be considered in the detailed review process.

Will you be taxed on this payout?

Pizarro said people who apply quickly could be paid out before the end of the year, avoiding a change in federal tax policy next year.

“We have a team ready to process offers as quickly as possible, in large part, being mindful of that potential tax deadline, unless the government changes that,” Pizarro said at a town hall last week.

He said he expects the first offers to be made soon.

The Internal Revenue Service does have specific tax reporting requirements for settlement payments, and there’s a deadline coming very soon.

The Federal Disaster Tax Relief Act, signed into law by former President Joe Biden at the end of last year to provide tax relief for victims of major disasters, expires at the end of 2025.

Non-reportable payments include:

• Compensation for residential owners and tenants for rebuilding, repairing or remediating damaged or destroyed homes. 
• Payments for lost or damaged personal property.
• Payments for personal physical injury or loss of life.
• Compensation for rebuilding or repairing commercial properties and tenant improvements.
• Payments to commercial tenants for lost or damaged personal property.

Unless Congress passes an extension, more types of payments will become taxable in 2026.

Reportable payments, after 2026:

• Lost rental income and business interruption
• Non-economic loss payments, excluding physical injury or loss of life

California, however, extended its tax protections for disaster survivors through 2030. Experts told LAist it’s still not clear if the Edison program falls under those regulations.

However, Manoj Viswanathan, a law professor at UC Law San Francisco, said it seems “very likely” that Edison’s compensation program would qualify under that California law because fire victims are giving up their rights to sue, similar to a settlement. Other law and tax experts LAist spoke to agreed the wording of California’s tax relief law likely would cover Edison’s program.