More of what victims can teach us after the fire

Editor’s note: This story is continued from last week.

Paying for fire insurance doesn’t necessarily mean you are covered

One homeowner, who declined to be named because of ongoing negotiations, discussed the complications that arise after a partial loss from fire. When a building is completely gone, insurers have little option but to pay the policy limits. But if a house is only partly damaged and it is “additional structures” that are gone, the situation is very different.

“My research confirmed what I experienced: Even though, in terms of emotional impact, having a better result than others, (the house not being gone) in terms of insurance, it’s not a better position, it’s much worse, because they fight you on everything. I found out that in spite of paying a huge premium, because of the way structures are categorized, I got about a third of the cost of rebuilding … In ‘other structures’ I had the garage and guest room, a wooden fence, a shed, an irrigation system. All were in one ‘bucket,’ counted as a percentage of the house coverage.

“Coverage A is primary residence, B is other structures. … I don’t believe they even looked at the property, so I got no guidance. When I asked later they said they had used a ‘formula.’

This same owner described the process for making a claim for personal property lost in the fire: “Property damage was another horror. My adjustor told me to create a list with the age of items lost. He kept urging me to do it the day after I returned home. That was crazy. I was in shock. He did not instruct me to include the condition of things lost. I happened to have a huge amount in the garage as I was redoing the floor in my bedroom, so all my clothes and bedroom furniture were in the garage besides what was usually there in storage. As a result of this (deliberate?) incomplete instruction, when loss was estimated, the assessors determined everything was ‘average,’ so I got less money for most items … rather than the real value of replacing something in excellent condition. Then they only give you part of assigned replacement cost, you have to actually go out within a year and re-buy everything you lost to get full replacement cost.

“That was impossible. The idea that you have to buy all those things to get compensated is absurd and deliberately unrealistic. It is an intentionally nightmare process, it is designed to reduce the insurance payout. The whole insurance process took me two years. It was so all-consuming I was unable to work. … Literally one of the worst things in my life, it wasn’t the fire, it was the insurance company. It took up so much energy and time, two years … and they weren’t dealing with me in good faith. My experience: You can’t trust that the professional, the agent, is ethical, diligent, looking out for your interests; the same with the adjustor.”

When asked for advice to share with readers, the homeowner added, “I would hire professional help, get your own adjustor, legal help right away. In my experience you cannot trust the insurance company to do the right thing.

“My insurance agent turned out to be incompetent, recommended by my realtor. Later, I learned that other owners in Idyllwild found her to be incompetent as well. I had the wherewithal to pay more for insurance if I had known I needed it. I was willing, but I had understood that I was fully covered with a premium policy. I tried to sue the agent’s malpractice insurance, but I didn’t get very far. I was paying so much more than anyone I knew, and it was my understanding that I had a very high caliber of insurance, yet what I had was inadequate …

“When the claims process becomes a battle, homeowners need guidance and advocacy. A friend, a contractor in LA, connected me with a lawyer and another contractor who work with people who have been in fires; they were both very helpful. They both had worked for my own insurance company in the past; the reason they had stopped was because the industry had changed. They were told not to give clients who had a claim any information; they were told to keep them in the dark. I had to go to mediation to get more money. I still lost a huge amount.

“And even though I had been paying a huge premium for six years. I never heard once from the agent after the fire. I called. Other evacuees got calls to see how they were. I called after I came back to start the claim; the agent did call a few days later, she had nothing to offer. The process itself was maddening, frustrating. I had no information. I called and said, ‘Isn’t there a blueprint for this process? Steps I can follow?’ They said, ‘No there isn’t.’ The adjustor was unclear, slow to get back to me, making unrealistic extreme demands. I finally insisted he be replaced. They supposedly took him off my case, … didn’t replace him but continued to rely on his info.”

It helps to have someone on your side

Another neighbor echoed these sentiments. Although AnaLia Lenchantin, a professional pianist, lost her home in a separate structure fire just last year, she also struggled with the insurance company and brought in a public adjustor. The adjustor is usually an insurance company employee who gathers information after a claim and processes it, but a claimant may hire an outside company to work on their behalf. These public adjustors charge a fee, perhaps 10% of the final settlement, but help homeowners navigate the perils of the claims process to get what they are owed.

AL: “The insurance companies do their best, but they will care first for their interest in saving money to their company. You have to be informed to get what you exactly are entitled to. Not everyone has a house burn down, much less twice; this is the only time I have to educate myself without even wanting it. What to say, what to not say, the lack of knowledge going through the grief of loss, and I have to take care of legalities … too much. I heard that not all [public adjusters] are the same. To me Greenspan [the public adjustor] is exactly what I need going through such dramatic tragedy. They have been like my father’s arm holding me in danger.”

Her public adjustor, among other things, helped her hire contractors for demolition, salvage and clean-up what was left (including her piano), catalog the lost contents, and promptly find her alternative housing here in Idyllwild. This last is another thing covered by insurance that can be a hassle in times of trauma.

The lesson is that the claims process is not transparent, and your insurer knows the process but may not explain it beforehand. The insurance company will ask you to document your losses on their timetable, but they may not tell you everything you need to know to get the best outcome. Few people deal with a loss like this twice in a lifetime, and even an attorney may be puzzled by the documents involved. Public adjustors, attorneys who specialize in insurance and disaster claims, nonprofits like legal aid and United Policyholders; these are resources you should know about before someone pushes some papers your way and asks you to sign.

Lenchantin brought up another detail a layperson would not consider: her home had a reverse mortgage, and banks may not allow a mortgagor to rebuild smaller. They hold a lien against a house of a certain size and description. The bank may “…say it has to be exactly as it was in square footage, go smaller and they are going to say you pay for the rest.”

Some of us have no insurance at all

There’s also the option to “self-insure.” Which means go uninsured and depend on your own resources and the kindness of others in the event of a loss. In addition to the 60% of homes classed as underinsured, about 4% of American homes have no insurance, although this varies by state and region. California has fewer uninsured than the average, but rural areas with older homes and (and older homeowners) have more. The homes are paid for, the owners take their chances. They tend to be retired, living on fixed incomes.

Mountain Center resident Tim Gilbert lost his home and its contents, and an RV, in the Cranston Fire. He had no insurance. “It’s a shame to come back to a loss, but better than being lost. Still, I sure do miss a lot of things … memories, pictures of family and grandparents.”

So, Gilbert found out about the value of community and the love of neighbors. “The fire happened, and then I got a lot of help from churches and people … One of the people who helped me the most was Larry Bischof, my neighbor. He let me live in a mobile home on his property until I could move back in, three or four months. Other people also gave me the trailer that I’m living in now. Claes Nilsson, Anna is his wife. My RV was lost in the fire. People really stopped and helped me. It’s amazing, I’m so thankful.” So, he has a roof over his head and is still living on the land he loves … and is still trying to keep up with abatement. It still “needs work. My son came and did some. Still have at least five trees that need to come down, died because of the fire. Kim at Woodies told me to make sure I call the MCFSC [Mountain Communities Fire Safe Council].”

Knowledge is power

All the insureds spoken with for this story emphasized how important it is to talk to your agent or broker before a loss and understand your policy in detail. Understand the market we are in and keep that $450 per square foot number in mind. An inventory of possessions is another small necessity; it can be as simple as a paper list or a video on your phone documenting the extent and condition of your “chattel.” Experts recommend annual review of your coverage, and shopping around is free. There are resources out there like United Policyholders to clarify and translate for you, and professional advocates like attorneys and public adjustors. Knowledge is power.

Think of your policy as like a novel: “Moby Dick.” Not something like the water bill that you glance through and stuff somewhere, but something to take with you to the beach, or a mountain cabin. Maybe with a bottle of wine. Allow it to transport you into a harrowing tale of action and suspense with you and your home as the protagonists … and the insurance company, and the county as sometimes inscrutable powers. There are the slow parts, the digressions into war, nuclear accidents, terrorism.

There are lighter moments; the paragraphs excluding cannabis plants or losses due to the home production of controlled substances.

There are sections that seem to be written in a foreign language, requiring a dictionary and the “CliffsNotes” available on various websites like the California Department of Insurance and United Policyholders help.

Then there are the absolutely ripping chapters, where you notice you are gripping the paper and holding your breath. And once you turn the last page, there’s the sequel: Earthquake Insurance.