Your house is likely the most valuable asset you’ll own—it’s the source of potential intergenerational wealth and the container for your belongings—but the task of insuring it properly comes with a lot less certainty. There’s been much discussion about the failures of homeowner’s insurance over the past few years, in light of the climate crisis wreaking havoc on communities that have long thought they’d never flood or burn. Variables dictate what is covered and what is not—like water coming from above versus from below—which, simply put, is a lot to handle when you’re filing claims after losing your home and all your belongings. In the United States, where a recent survey showed that 40 percent of the population lacks enough cash or savings to cover a $1,000 emergency, a tragic loss can be destabilizing for months on end. Over the past decade, however, crowdfunding has emerged as a sort of balm for these moments, a way of connecting faraway donors with survivors’ immediate financial needs.

In the late aughts, new websites like Kickstarter and Indiegogo normalized crowdfunding as a source of financing for creative projects and inventions like a “customizable” smartwatch or the Veronica Mars movie. But the true shift in our culture came in 2010, when GoFundMe—which doesn’t require users to hit a goal or provide incentives for donations—quickly became a leader in the personal relief market, raising funds for those in crisis. Car accidents, funeral costs, evictions, and even war relief have meant that more than $9 billion has been raised for GoFundMe’s users. (The company requires a payment-processing fee of 2.9 percent, plus 30 cents, of each donation.) The platform has most famously become a necessary supplement for our nation’s often unsubstantial health insurance coverage.

In recent years, we’ve seen another essential need grow in asks on the platform: housing. Fifteen years since its launch, GoFundMe has become disaster relief for larger system failures—which now includes homeowners grappling with climate change. Its use in this capacity was seen most acutely in January when wildfires tore through Los Angeles, burning more than 40,000 acres, destroying more than 16,000 structures, and killing at least 29. Almost immediately, GoFundMe became a lifeline for those whose homes were damaged or lost entirely. Rachel Davies, author of Personal Space, a Substack about culture and design, began compiling an ongoing list of individual GoFundMe fundraisers, along with other fundraising campaigns, launched by affected residents (or their friends and relatives) shortly after the fires started; as of early February, the list includes more than 1,300 active funds, with asks ranging from $1,000 to $1.5 million. GoFundMe directories for displaced Black, Latine, and disabled residents have also been organized and publicized.

But as the internet says, “This is not a heartwarming story.” The speed with which these pages were set up was telling; the lack of faith in systems meant to protect and provide immediate need was apparent. As with health insurance, crowdfunding postdisaster highlights how existing inequalities are replicated—or exacerbated—when large-scale catastrophes hit and, importantly, speaks to the increasingly feeble infrastructures that are supposed to keep us safe, alive, and free from financial ruin. A GoFundMe page isn’t just a way to chip in—it can be a lifeline when the cracks in our systems begin to show.

For those who came of age online, using digital crowdsourcing platforms to raise money after natural disasters feels almost as natural as relying on the Red Cross or FEMA aid. According to the New York Times, GoFundMe was used to raise $3 million for natural disaster recovery in 2013; last year, the website helped raise nearly $235 million for relief and rebuilding, according to its annual Year in Help report. In Los Angeles, GoFundMe says, its platform helped raise more than $200 million within two weeks of the fires’ start; by comparison, one year after the Maui fires, another GoFundMe report said over $65 million had been raised. Since Hurricanes Helene and Milton made landfall last September and October, respectively, more than $110 million has been raised using GoFundMe’s platform. Five months after the storms passed, you can still peruse 138 pages of verified individual fundraisers compiled for Florida hurricane disaster victims.

Many residents who escape with little except their loved ones are faced with the costs of temporary shelter, clothing, and food. One insurance executive told Fox Business that the cost for families evacuating in a natural disaster can be $5,000 or more. But some of these expenses should be covered by homeowner’s insurance under “additional living expenses” (ALE), says Robert Feldman, CEO and cofounder of WOWS Insurance Services, a wholesaler in Southern California. While some residents have grappled with unverifiable online rumors suggesting that funds raised from crowdsourcing platforms might impact ALE and other insurance payouts, Feldman notes that some affected homeowners were already receiving living expenses from their insurance companies a week after the fires broke out.

Yet, as we’re seeing very clearly, not all policies are created equal. In his book The Great Displacement: Climate Change and the Next American Migration, author Jake Bittle follows several families after the 2017 Tubbs fire in Santa Rosa, California. Among higher-income families from an upper-middle-class neighborhood called Fountaingrove, their insurance policies “provided them an almost unlimited tranche of money.… Such policies required the insurer to pay out rental costs equivalent to the value of the victim’s home, which for many people in Fountaingrove meant upward of $10,000 a month.” Of course, these same payouts did not extend to those with average means—some policies cap ALE payments at 30 percent of one’s total dwelling coverage. Renters, or those who own a less-valuable home, would get less cash paid out—which, Bittle notes, crunched out many renters and lower-income homeowners as landlords dramatically raised rents immediately after the fire.

In Los Angeles, residents quickly noticed rent gouging—defined by an increase in rent of 10 percent or more based on the previous lease. Alissa Walker, author of the Torched newsletter and a Dwell contributor, reported on dozens of volunteers who have been tracking rent gouging in the area. Their spreadsheet includes nearly 1,500 properties considered “rent gouged.” On January 10, the New York Times also reported that an L.A. real estate agent had found that “out of more than 400 listings in the Central Los Angeles and San Fernando Valley areas, about 100 had raised rent more than 10 percent” since January 7. Despite Governor Gavin Newsom’s issuing a state-of-emergency declaration that, writes Walker, triggers a statute against price gouging, landlords are still taking advantage of victims’ desperation, and the effects can be long-lasting: Rents increased 4 to 6 percent from 2000 to 2020, according to an October 2023 Brookings Institution report surveying locations of major U.S. natural disasters over the last two decades.

While capital raised through GoFundMe and other platforms could provide an extra cushion for rising rents, like insurance policies themselves, crowdfunding success is also not equal. When the Marshall Fire swept through suburbs of Boulder, Colorado, in 2021, it destroyed more than 1,000 structures in a matter of hours; as in Los Angeles, the blaze was fueled by high winds. A team of researchers at the University of Colorado Boulder and the University of Wisconsin–Madison examined the GoFundMes launched in the wake of the disaster, which, the authors wrote in their 2024 study Money to Burn: Crowdfunding Wildfire Recovery, raised $23 million in just a few weeks. The team looked into several variables, including “personal credit characteristics, estimated incomes, real estate losses, and rebuilding efforts of disaster survivors.” They found that wealthier households (those making more than $120,000 annually, on average) “can expect roughly 25 percent more GoFundMe proceeds than a household in the bottom tercile (earning less than $78,000 per year).”

Unlike other acts of private charity in which the most aid goes to those with the greatest need, wealthier households, the paper elaborates, often have a wider reach because of their “network breadth” and higher “network depths.” “Average donation amounts increase by $1.56 per 10 percent increase in beneficiary income.… Remarkably, we find that generosity is regressive even within donor: donors who give to multiple campaigns tend to give larger amounts to higher-income beneficiaries,” the study says. Beyond household wealth, The Intercept recently found that racial inequities persist in donor reach, some of which is driven by GoFundMe’s “curated” pages. It analyzed 1,300 of the California wildfire relief campaigns included on the GoFundMe list a week after the Eaton and Palisades fires began and found that “less than 40 percent of the fundraisers on the Displaced Black Families list were included in GoFundMe’s curated list.” A GoFundMe spokesperson clarified to Dwell that these pages are not “curated”; rather, they are “centralized hubs” that include all fundraisers that are verified by an internal team.

Unlike other acts of private charity in which the most aid goes to those with the greatest need, wealthier households…often have a wider reach because of their “network breadth” and higher “network depths.”

Not only does this mean that lower-income families and people of color might receive fewer dollars for immediate needs, it can also have real consequences for rebuilding: Money to Burn demonstrates that those survivors with more crowdsourced funds begin rebuilding their homes faster than those with fewer raised dollars. In that process of rebuilding, crowdfunding could become a necessity as more homeowners find themselves underinsured. Being underinsured, says Feldman, means insurance coverage is less than (or in some cases equal to) the value of the house at the time of its loss. There’s a “whole host of reasons why” homeowners might find themselves in this predicament, he continues, including unreviewed policies that have not been updated annually to reflect changes in material costs or home improvements.

When University of Colorado and University of Wisconsin researchers examined insurance policies of Marshall fire victims, it wasn’t unreviewed policies that might cause a home to be underinsured. Instead, researchers suggest a phenomenon of “coverage neglect,” in which consumers overlook recommended coverage amounts (often because they’re unaware of the actual cost to replace their home) in search of lower premiums, resulting in “a very natural incentive [by insurers] to cut prices by offering less insurance,” J. Anthony Cookson, coauthor of the study, told Fortune. Interestingly, the problem cuts across class divisions—the majority of higher-income households were underinsured (though they are less likely to be than lower-income policyholders).

In California, where state regulators approved Allstate’s 34 percent average premium hike last year and more than 100,000 residents have lost their insurance since 2019 (including 1,600 Pacific Palisades policies that were dropped by State Farm five months before the fires broke out), hunting for the right amount of affordable coverage as options dwindle may exacerbate underinsured rates. The results, says Feldman, can be “devastating.” “A lot of times, when they’re underinsured, consumers—if they can afford it—are having to take out additional loans to rebuild their homes,” he says. It can make the decision to rebuild more precarious; in the case of the Marshall fire, the Boulder study notes, “underinsured wildfire survivors with destroyed homes are less likely to file rebuilding permits and more likely to sell their property.” A natural disaster—where not one but thousands of houses are destroyed or damaged—can worsen the problem, too.

“If there’s a thousand homes gone versus one home being gone, that’s two different prices to rebuild,” Feldman explains. An increase in demand for materials, supplies, and labor can increase the costs of rebuilding, meaning some homeowners might not fully understand the extent to which they are underinsured until they rebuild. Providing the right amount of coverage is a balancing act for insurance companies that, says Feldman, can be penalized for overinsuring structures. Immediate liquidity—having cash on hand raised from a GoFundMe—can offset the unknown and cover certain upfront soft costs like design fees.

Still, economic disadvantages follow families throughout disasters and the rebuilding process; as the Consumer Federation of America’s March 2024 report demonstrates, the number of uninsured homeowners concentrates around low-income communities of color. As the dust settles across Los Angeles, it seems inevitable that similar inequities around living expenses, crowdfunding efficacy, and underinsurance will begin to affect the city’s more vulnerable residents. The cracks in the structures that keep people alive will widen and swallow more individuals, regardless of income or cultural background. And the willingness with which they turn to crowdsourcing has become a barometer of just how fallible our insurance lifelines are.

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