California wildfires: What you need to know about insurance for your losses

As still more wildfires rage through the Bay Area, many people are wondering how to handle the practicalities if they must evacuate — or worse yet, if their home is lost or damaged. Here are answers to common questions about insurance, money and real estate.

Q: I had to evacuate and don’t yet know my home’s status. What should I do?

A: The first thing, said Amy Bach, executive director of United Policyholders, a nonprofit that helps consumers navigate the insurance maze, is to get a copy of your complete insurance policy to see what it does and doesn’t cover. You can ask your agent, call the company or log onto the company website to download a copy. She recommends printing one out so you can highlight and take notes on it.

Q: What should I look for in my policy?

A: Find out the maximum benefit available, any limitations that will affect the flow of those funds, how much money you’ll have for repair and rebuilding, when you can access that money, and what you have to do to access it.

Q: My home is lost or damaged. What do I do?

A: After reviewing your policy, notify your agent that you’ve had a loss and are making a claim. If your house is uninhabitable, focus on securing temporary housing ASAP. But Bach cautions that you should avoid making major financial decisions in the first month. “People are not in the best mental state after going through a profound trauma like this,” she said. “They aren’t sleeping well; it’s not a great time to make big decisions.”

The California Department of Insurance offers a helpful list of top 10 tips for wildfire claimants.

Q: Will insurance pay for living expenses while I’m evacuated?

A: Most homeowner policies cover displacement expenses if you can’t use your home due to a covered peril, such as a wildfire or mandatory evacuation. That includes money for a temporary living space, moving expenses, boarding your pets, buying clothing, eating out if you don’t have kitchen access. Make sure you keep receipts for each and every expense.

Q: How long will displacement coverage last?

A: People have complained to the California Department of Insurance after this summer’s wildfires that their additional living-expense benefits were cut off after two weeks, unless they could prove their property was still uninhabitable, even if they were still under evacuation orders. Others complained that those benefits were discontinued even while there was no power or water service at their homes. California Insurance Commissioner Ricardo Lara issued a notice this month urging insurers to cover more than two weeks of living expenses, as well as expenses for those whose homes lack water or power.

SB872, which passed the Legislature with broad bipartisan support, would address this by extending the two-week limit and providing coverage when an undamaged home cannot be lived in for other reasons, such as loss of water or power caused by a covered peril. Gov. Newsom has until Wednesday to sign the bill. His office did not return an inquiry about his plans.

Q: When will I get displacement money?

A: Insurers sometimes prefer to reimburse you after you’ve paid out of pocket. But that can be a hardship. SB872 (see above) would require insurance companies to pay four months of living expenses in advance, as well as 25% of payments for lost contents, without having to submit an inventory form.

Meanwhile, Lara has issued an emergency notice to insurance companies in the state, requesting they give survivors more flexibility with deadlines and documentation and cover a quarter of lost possessions without inventories. “It’s a request, not an order,” said Michael Soller, a spokesman for the California Department of Insurance. “Anyone whose insurance company is not complying should call us.” That number is 800-927-4357.

Two firefighters stand by a fully engulfed house as the Shady Fire burns in Skyhawk area of Santa Rosa, Calif., on Monday, September 28, 2020.

Q: My insurance company says my home is habitable now, but I don’t think it’s safe yet. What should I do?

A: This is an increasingly common problem, Bach said, noting that some folks in Boulder Creek — a community in Santa Cruz County that endured the CZU Complex fires — were essentially told, “Here’s a sponge and bottle of cleaner, have at it.”

An air quality expert — not an adjuster — should determine if it’s safe to move back in, she said. Homeowners should get a professional’s estimate on remediation costs for smoke and other damage.

Q: I’m a renter and have renter’s insurance. What do I do?

A: Get a copy of your policy. Inventory and value all your losses, including your possessions, moving expenses, extra rent. Notify your insurer and file a claim.

Q: I’m a renter and do not have renter’s insurance. What are my options for help?

A: The Red Cross often offers cash cards for about $300 and two or three nights in a hotel, Bach said. Various localities may offer shelter space. You can apply for a FEMA individual assistance grant if your income is under $34,000; the average grant is $5,000.

Q: What if I’m worried my insurance company will drop me?

A: Companies generally cannot cancel your policy before its term ends, and must give 45 days notice of a non-renewal. If your policy is canceled or not renewed, ask your insurer for steps you can take to keep it, and then shop around for other options. “We hear the same stories again and again: people having a hard time finding insurance, keeping insurance even when they can find it, and seeing the costs rise due to wildfire risk,” Soller said.

For people who can’t find insurance elsewhere, the state offers a last resort: California Fair Access to Insurance Requirements (FAIR) Plan, (800) 339-4099. It is expensive and limited to just fire and smoke; it does not cover water damage, mold, theft and liability, for instance. You can buy a supplemental policy called “Difference in conditions” to address some of these shortcomings.

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Q: How can I protect my home against wildfires?

A: Experts recommend that you clear brush around your home’s perimeter to create a “defensible barrier” of at least 5 feet, and preferably 10. You should clear gutters of dry leaves and debris, and screen or cover eaves, vents and any other openings where flying embers could land. If you can afford it, changing to a metal roof is recommended.

Both the Department of Insurance and United Policyholders hope to persuade insurers to offer incentives for people who take these steps.

Consider increasing your insurance coverage. “Two thirds of wildfire victims find themselves severely under-insured,” Bach said.

If you’re a renter, especially in a wildfire-prone area, consider renter’s insurance. “People don’t realize that if you don’t have a renters’ policy, you’re not covered for your possessions,” Soller said.

Q: What insurance resources should I tap?

A: The California Department of Insurance encourages consumers to call it with questions at (800) 927-4357. “We have staff ready to help,” Soller said. “We can help people get the most out of their policies.” It will hold a virtual hearing on wildfire insurance on Oct. 19 from 1 to 5 p.m.

United Policyholders has an extensive library of information about the 2020 California wildfires and holds frequent webinars on such topics as navigating claims and what renters can do. It welcomes emailed questions at [email protected]

Carolyn Said is a San Francisco Chronicle staff writer. Email: [email protected] Twitter: @csaid

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