We bought our dream home in LA for $1.5M 6 months ago. Now it’s gone in the wildfires, and we still owe $1M. Do we need to pay off the mortgage even if our insurance can’t cover it?

That said, even if your home burns down, you generally still own the land it sat on, according to Frontline Wildfire Defense. If you don't want to rebuild your home on the land it originally sat on because you're concerned about another wildfire or natural disaster, you can sell your land and rebuild elsewhere. But you'll still have to pay off your mortgage balance, even if the proceeds from selling your land don't cover it in full.

Similarly, if you get an insurance payout for your destroyed home, you’re not obligated to rebuild it at all. You could take the money your insurer gives you and use it to purchase a new home, or decide that you never want to own a home again and use the money to cover rental expenses for many years.

What to do after a disaster-related house fire

If your home burns down in a fire, it's important to know what steps to take. First, contact your insurance company as soon as you reasonably can to let them know what happened and get a claim filed.

It also makes sense to cancel utility service to your home. If it's uninhabitable, you won't be needing the service anyway, so you might as well avoid any meter charges.

Next, figure out if you have "loss of use" coverage as part of your policy and what that coverage entails. Your policy might cover the cost of temporary housing if your home can't be occupied — either because it's severely damaged or because it's gone.

Be sure to keep records of any financial expenses you incur in the course of being unable to occupy your home. These include hotel bills, meals and other essentials.