Alicia Kalvin awoke the morning of Jan. 7 to an urgent text from a friend: “There’s a fire on your street.” She hurried outside, alarmed to see red skies and low-flying planes dumping water.

“I have to get out of here,” thought Kalvin, 53, who lives in the Pacific Palisades of Los Angeles.

Back inside, she glanced out the bathroom window and saw a hellish scene unfolding. It was a neighbor’s house engulfed in flames, embers spewing into her own yard.

Kalvin frantically threw on clothing. She grabbed her purse, her dog, a can of dog food and her mother’s ashes before fleeing her childhood home. She didn’t get an evacuation warning.

Flames licked the hills of the Los Angeles enclave as Kalvin drove away. She says she’s had nightmares ever since.

Three days later, she returned to the area with a police escort.

“I promised myself I wouldn’t look, but of course I looked,” said Kalvin. “It looks like 10 nuclear bombs went off. The whole neighborhood was just leveled — markets, churches, schools. It looked like a war zone.”

In one sense, Kalvin is lucky because her home, somehow, is still standing.

But questions about her financial future abound — as they do for thousands of L.A. residents whose lives were upended by the recent wildfires.

There’s significant damage to Kalvin’s home. Some sections of the exterior, including the roof, are scorched; the landscaping and artificial lawn are destroyed; the interior smells of smoke; and ash, blown in through broken windows, blankets the hallways, Kalvin said.

She’s trying to untangle what her home insurance policy — the California FAIR plan, the state’s insurer of last resort, which steps in when residents can’t obtain coverage elsewhere — might cover.

“I’m very concerned at how much I’m going to have to spend if and when I fix up this house,” said Kalvin, who is single and doesn’t have kids. “Because insurance won’t cover everything.”

Even before the Palisades Fire, Kalvin faced financial challenges.

Work has dried up in Hollywood in recent years; Kalvin — an educator hired to teach child actors on television, movie and commercial sets — has had trouble finding gigs. She collects unemployment some weeks and funds income shortfalls with savings originally earmarked for retirement.

“My future is very up in the air,” she said. “And the uncertainty is very unsettling.”

The recent wildfires that erupted in Greater Los Angeles — fueled by hurricane-force winds and exceptionally dry conditions, exacerbated by climate change — are estimated to be among the costliest in U.S. history. They’ve killed at least 29 people.

AccuWeather estimates the blazes caused more than $250 billion in total damage and economic loss.

S&P Global Ratings projects the L.A. fires will cause roughly $40 billion of insured losses. That sum would exceed the roughly $13 billion of the Camp Fire in Paradise, Calif., in 2018, which was the costliest blaze in U.S. history.

“There are all sorts of costs associated with a disaster,” said Andrew Rumbach, a senior fellow at the Urban Institute who studies household risk to natural hazards and climate change.

“They pile up, and many Americans don’t have a [financial] cushion to rely on,” Rumbach said. “Our main way of dealing with that as an economy is going into debt. That lingers for a long time.”

The fires, largely contained, were still burning as of Thursday.

The blazes — the largest being the Palisades and Eaton Fires — have scorched more than 50,000 acres, an area exceeding the size of San Francisco, and destroyed more than 16,000 structures.

Most of those structures have been residential houses, S&P Global Ratings analysts wrote in a recent note.

The disaster pushed thousands of L.A. residents into one of the nation’s most expensive housing markets overnight. They were left with countless financial questions, compounding deep emotional scars: Considerations like where to live, how to clean up, whether to rebuild — and how to afford it all.

“Individuals are dealing with insurance, mortgages, the replacement cost of belongings, temporary housing,” said Sam Bakhshandehpour, 49, who’s lived in the Pacific Palisades for 13 years. “There are lots of near- and long-term variables and frankly there are no answers right now.”

Bakhshandehpour, an investment banker turned restaurateur, said the extent of damage to his home is unclear.

He wants to continue living in the Palisades, which he calls an “oasis” in L.A. — but acknowledges cleanup of debris and toxic materials and repair to local infrastructure “could be years.”

Indeed, the recovery period for L.A. residents could be two to five years or longer, Rumbach estimates.

Some residents may never be able to move back.

“Even if there is a desire on the part of the homeowners [to rebuild], it is unclear as to whether the land will be re-zoned such that it can no longer be developed,” according to S&P Global Ratings.

For example, victims may qualify for FEMA assistance. Applicants can get up to $770 upfront for basic needs like food and shelter while the government vets their application for more aid, potentially worth tens of thousands of dollars.

During a state of emergency, California law also requires home insurers to issue a cash advance worth at least 30% of a policyholder’s “dwelling” insurance limit, up to $250,000, without filing an itemized claim. They must also advance at least four months of coverage for living expenses.

“There is no comparison to the dollars you get from a home insurance policy,” said Amy Bach, executive director of United Policyholders, a nonprofit consumer advocacy group. “It has long been the most important source of funds to repair and rebuild, much more than any government program, for the vast majority of people.”

Some insurers are paying policyholders even more than the law demands, Ricardo Lara, the California insurance commissioner, said Jan. 23. However, others “are not adhering” to those consumer protections, Lara said.

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State Farm urged Pollak to use its third-party vendor to find future temporary housing — a cost the insurer would pay for directly, rather than via reimbursement. As of Thursday, Pollak was awaiting approval for certain properties she’d identified. She worries they’ll be snapped up in the interim.

“As Feb. 5 approaches, I am getting pretty nervous,” she said.

Then, there are longer-term questions.

The back side of their home is scorched. Everything inside reeks of smoke; various consultants have warned the smell won’t disappear unless insulation and ducting is replaced. Contractors have recommended a “full gut” and a replacement of all porous, hard-to-clean items like carpets, couches and upholstered beds, Pollak said. They must wait for the insurer’s determination.

Many insurers have stopped writing policies in California or limited their exposure due to wildfire risk. Homeowners who lost coverage may not have renewed it, while others may have foregone insurance altogether in the face of higher premiums — and those rates will likely increase in the future after the L.A. fires, said S&P Global.

Two-thirds or more of L.A. fire victims will find they were underinsured, said Bach of United Policyholders. That means their insurance policy won’t cover the full cost of rebuilding or repairing property.

For example, 36% of victims who filed insurance claims after the 2021 Marshall Fire in Boulder County, Colorado, were “severely” underinsured, according to a recent study by researchers at the University of Colorado Boulder and University of Wisconsin-Madison.

Their coverage was less than 75% of the actual cost to fix their home, the study found. That means policyholders rebuilding a $1 million home would need an extra $250,000 or more out of pocket, Tony Cookson, finance professor at the University of Colorado Boulder and a co-author of the study, said in a statement.

State Farm, the state’s largest insurer, dropped Kalvin, the L.A. resident and teacher, in July 2024. She switched to the California FAIR Plan.

The policy has more meager coverage than her former policy, Kalvin said. She’s filed an insurance claim but hasn’t yet received any funds. As of Thursday, an insurance adjuster hadn’t yet been assigned to her case.

For now, her basic needs are being met. Kalvin is staying with a friend in Santa Monica and doesn’t have a mortgage on her Palisades home. While her bills are limited — largely for groceries, and health and auto insurance — she feels stretched given it’s been hard to get more than two days of work per week.

She doesn’t know what her future holds — and whether it will be in the Palisades.

“I probably would continue living there, because I have such love for the Palisades,” she said. “It’s home. But it’s so changed now. And I don’t know how I would feel.”