Some of the 53 victims of the Corral Canyon Fire last week who lost their homes have been shocked twice over when they learned the real limits to their homeowners insurance coverage.
“The overwhelming number of claims we’ve been seeing from clients fall under California FAIR Plan policies,” Wendy Baker, of B.W. Baker Insurance, said. “And those policies might cover full replacement, but they won’t cover for loss of use.”
Unwelcome words for the dozens of families who are facing a long rebuilding process and wondering how they will pay for alternative living quarters. Brad and Anita Stanley lost their newly remodeled home in Corral Canyon that had been insured under the FAIR Plan.
“But we still have to pay our mortgage and for somewhere to live,” Anita said. “We’re renting a place in Calabasas.”
The California FAIR Plan was designed in the late ’60s as a statutory insurance industry association that issues property insurance as a last resort for homes in areas of high fire incidence. “California FAIR Plan is good in that it will take care of your dwelling and personal property,” Baker said. “But it won’t pay for you to live somewhere while you’re rebuilding. It’s sad for our clients. A lot of people up in Latigo and Corral are on tight budgets and they’re undercovered.”
“Premiums for homes in these types of areas are going to cost five to 10 times that of regular policies,” Bart Baker, Wendy’s husband, said. “But if you have good brush clearance around your home and proper underwriting, you can get full coverage through companies like Lexington or Lloyd’s of London.”
So how can homeowners make sure they get full and fair reimbursement for all their losses when filing claims?
Glenn T. Rosen of the law firm Loewenthal, Hillshafer & Rosen cautions, “Insurance companies put homeowners between the crosshairs at all times. The most important thing is to make sure you comply with all duties under your policy to mitigate damage and present proper proof of loss.”
This means covering holes in a roof so rain doesn’t further damage property post-fire or protecting open drywall that might still be salvageable. “Don’t give your insurance company any reason to deny your claim,” Rosen said.
“Make sure your adjuster sets out all your coverage and lists any reasons for denial,” Rosen continued. “When rebuilding, be sure to hire a contractor who will work with your insurance claims adjuster. He’ll have a better pulse of the real costs. Just make sure your contractor is licensed and bonded.”
Some homeowners choose to work with a public adjuster. “This is someone who works with the policyholder to help make sure they fully get what they deserve from the insurance companies,” Rosen said. “Typically, public adjusters take 3 percent to 10 percent of the full replacements costs for this service.”
Finally, don’t hesitate to apply to FEMA. “If you qualify, they’ll give grants for up to $5,000 to help you get back on your feet,” Rosen said.
FEMA has set up an office at Malibu Bluffs Park to help people with the application process, Mark Ball of Farmers Insurance said. “So folks covered under FAIR Plan should check with them to see if they qualify.” (The assistance center will be at the park through Friday only, then next to city hall next week.)
One of the more important steps a homeowner can take now is to check in with the Los Angeles County Tax Assessor’s office, also at Bluffs Park. “You can apply for tax relief for next year while you are rebuilding,” Ball said.
Ball also emphasized the importance of properly cataloguing the contents of your home. “With digital cameras these days, it is so easy to take photos of the interior of your home and store them on a CD to keep at your office. This will be invaluable when filing your claims,” he said.
Meanwhile, burned-out homeowners have salvaged what they can. “I was able to save my photos, videos and computer equipment,” Brad Stanley said. “Ninety percent of everything we lost is replaceable, I guess. But it’s hard.”