Continuing Battle against Wildfires Fuels Need for Insurance

As firefighters battled into last week trying to contain one of a number of brush fires in the Los Angeles area, residents throughout California are keeping a close eye on weather conditions and their insurance policies, as the 2005 fire season heats up.

While it would take a number of devastating fires to rival the season of 2003, California Insurance Commis-sioner John Garamendi recently warned residents that they need to have all their insurance in order and do as much as possible to make their homes fire-safe. Last year, far too many homeowners suffered major losses on property and home assets due to the wildfires and by not being properly covered by their homeowners’ insurance, he said.

“It is critical that you review your policies now to protect your homes and family,” said Garamendi in a recent statement. “Learn the lessons being taught by the brave survivors who discovered that, in many cases, their policies didn’t even cover the cost of rebuilding their homes, let alone the loss of their home assets and family treasures.”

The aftermath of the 2003 and 2004 wildfires resulted in the Department of Insurance’s consumer services bureau discovering multiple complaints by homeowners’ who lost their homes and assets in the wildfires. The serious problems homeowners’ encountered after filing claims with insurers urged Garamendi to create The Homeowners’ Bill of Rights (HOBOR) – Wildfire Survivors Protection which passed the legislation in 2004. As a result, it gaave homeowners additional rights in protecting their homes and property.

The HOBOR legislation gives homeowners the right to extend the time to rebuild or replace their homes after a declared state of emergency; allows homeowners to mediate disputed insurance claims; protects homeowners because insurers are prohibited from canceling a policy between renewal periods while the home is being rebuilt; and requires insurers to modify the disclosure from “Extended Replacement Cost Coverage” to “Limited Replacement Cost Coverage,” as well as add underinsurance disclosure on homeowner’s policies.

A report released Oct. 25, 2004, by the California Department of Insurance (CDI) indicated that many of the homeowners who suffered total losses in the 2003 Southern California wildfires complained that they were underinsured. Of the 2,734 “total-loss” claims filed with insurers, 22 percent–or 676–generated complaints regarding the handling of the claim by the insurer.

By comparison, CDI usually receives complaints from approximately 1 percent of all claims in most lines of insurance. Nearly half of the wildfire complaints–316 of 676–involved underinsurance.

As for the recent 2005 fires, officials were battling several blazes in the past two weeks, but none appeared to be life-threatening.

In a rural area east of Los Angeles, firefighters had gained the upper hand earlier this month on a fire that torched more than 6,400 acres. In Riverside County, another fire broke out the same week on some steep hillside brush, but officials appeared to have contained that fire rather quickly.

With the fire season traditionally running through November, Peter Moraga, senior communications specialist for the Insurance Information Network of California (IINC), told Insurance Journal, “Fire threat is pretty much a whole-year event. In the past, we have seen some very bad fires even in January. The worst fires recently were in the Topanga/Simi Valley area and the Moreno Valley in Riverside. The Topanga fire actually started in the San Fernando Valley community of Chattsworth and spread throughout the area, across the L.A. County border into Ventura County. The Moreno Valley fire was contained to that section of Riverside.”

Moraga said that no damage estimates had yet been offered, “However, we do see a rise in acres burned after a year with increased rains,” Moraga said. “This last year, Southern California had record rainstorms, which generates a lot of brush. So this year could be a bad one. Nothing to compare to 2003 (we hope).”

For specifics on acres burned and actual maps, readers can consult the California Department of Forestry Web site at: http://www.fire.ca.gov/php/.