What to Do After a Wildfire Depends On…

…who you believed before the fire.

When Weed’s homeowners bought their insurance policies, they trusted and believed the insurance agents and brokers. Then wildfires changed everything.

Burned home in Weed, California; photo by Justin Sullivan/Getty Images

Although homeowners buy insurance for the total loss of the structure, a simple fact remains that getting dollars from an insurer does little to replace the memories of holidays around the dinner table, of grandkids playing in the yard, and the photo albums from decades past. Still, we must move forward and what remains to be done is to submit the claim to the insurer; receive the check; and start the process of rebuilding. But this is when the real nightmare begins — realizing that your insurer intentionally underinsured your home so that it could sell more policies than the competition.

Underinsurance: A persistent problem

After the 1991 Oakland Hills fire and the 2003 Southern California wildfires, legislators discovered through public hearings an additional aspect of the danger wildfires pose to homeowners: underinsurance. Legislation was enacted to remedy this situation. Nonetheless, when large wildfires struck Southern California in 2007 and 2008, state officials realized again the underinsurance problem persisted.

Data from the 2007 wildfires showed that 74% of the homeowners were underinsured by an average of $240,000. To address these concerns, the Insurance Commissioner proposed new regulations and amendments to existing regulations, and in 2010 strong and strict guidelines were put into place.

photo by CNN

Fighting the good fight for homeowners

My clients are fighting these insurers and I am disgusted with what we are uncovering: Attorneys playing slick; adjusters deceiving their insureds; agents and brokers who over-promised and under-delivered. Like the rest of us, when buying insurance to cover their homes, each owner was asked questions by the agents/brokers, like the year the home was purchased, square footage, price, foundation, etc.; each owner was told the insurer would issue a policy; and each was told that when the premium was paid, the coverage would begin. In each case, the insurer calculated the policy limits and the annual premium. The homeowners believed their insurers, paid their premiums, and found comfort knowing that their homes were protected.

Now, after the 2014 fire, homeowners are being told by the very same insurers who calculated the limits that the coverage limits are grossly inadequate. When these homeowners bought their policies, they trusted and believed the insurance agents and brokers; they trusted and believed the “Good Hands People” of Allstate; the “Like a Good Neighbor” agents of State Farm; the brokers and agents for the insurer whose memorable jingle is, “Nationwide is on Your Side.” But where’s Peyton Manning now? Where is “We are Farmers, dum da dum-dum, da dum dum”? And where are these supposed “Good Hands” people?
 

“You should not have believed us.”

When the 2014 homeowners complained to their insurers, the insurance companies responded with: Well, I guess you should not have believed us when you bought that policy.

It’s time we come together to rebuild these towns and tell these insurers that 1991, 2003, 2007, 2008, 2010, and 2014 are far too many warnings. The question I ask now: Why should the insurers get so many warnings when the insured, who misses one single premium payment, gets a nasty letter that coverage is being canceled?