Three years since the Tubbs fire, there have been some notable improvements for homeowners who are wrangling with their insurance carriers in the aftermath of a wildfire loss.
The state Legislature enacted some reforms, such as boosting rental living expenses from a maximum of two years to three years after a disaster while a homeowner waits for their home to be rebuilt. Last month, Gov. Gavin Newsom signed legislation that required carriers to provide initial payments of at least 25% of their personal property that was destroyed without having the homeowner detail their entire inventory.
Yet there is still no solution for the most vexing problem of all: How to ensure that homeowners have sufficient coverage to rebuild their house and that they actually receive that amount?
In California, the onus is on the homeowner to ensure they have the right coverage amount to rebuild — a figure that only a local contractor would likely know. And most residents don’t reach out to a builder when pricing or updating their coverage.
That was proven after the 2017 wildfires when a survey by the consumer group United Policyholders found about two-thirds of those fire victims were underinsured — with some in pricey Fountaingrove facing a shortfall of more than $1 million. That number likely hasn’t changed much, said Amy Bach, executive director of the San Francisco-based consumer group. It is a cold reality that will soon be discovered by hundreds of homeowners in the wake of the Glass fire, which destroyed or damaged about 800 single-family homes.
“At this point, I’m convinced that insurers don’t want to solve the problem,” Bach said.
As the problem lingers, a Santa Rosa firm is attempting to help homeowners protect themselves. BW Builder Inc. assists homeowners in the aftermath of a fire by preparing detailed reports on how much it will cost to rebuild their residence and puts the estimate in a format that places the burden on the carrier to accept the proposed charges. The firm also offers such reports for any homeowner wondering how much insurance they need to rebuild so they aren’t underwater after a disaster. Those pre-disaster reports cost $75.
Most homeowners are still unaware that their coverage is likely insufficient, especially as labor and materials cost have increased in recent years, said Matt Everson, a partner in BW Builder.
“Their answer is typically why would my insurance company underinsure me?” he said.
Everson is a retired certified financial planner who previously worked as an insurance company employee. In the aftermath of the 2017 fires, he joined with contractor Bill Wallace, who has deep knowledge of the Xactimate software program used by carriers that compiles the costs for rebuilding. BW Builder has since helped about 200 homeowners across California negotiate with insurance carriers. For the firm’s first 100 clients, it found about $60 million in additional coverage that was owed to homeowners than what their carrier originally offered to pay them, Everson said.
“Most of the stress when it comes to rebuilding is knowing that you’re going have enough or if you’re going have to basically fight your insurance company the entire length of the way,” said Wallace, who noted that the firm can help speed up the payment process by months. “It kind of takes a load off someone’s shoulders if they know exactly how much they’re going have to build or replace.”
That was the case for Darby Davy, who lost her home in Coffey Park during the Tubbs fire and had to battle with State Farm to get properly compensated. She noted that Everson informed her of a clause in her policy where she was entitled to an additional $75,000 in payments as a result of her loss. “It’s just very overwhelming,” she said of the claims process.
The detailed estimate was Davy’s leverage in her back-and-forth correspondence with State Farm, which was additionally hampered by out-of-state claims adjusters who didn’t know the North Bay housing market. “State Farm just kept coming back to me saying you need to prove to me that you need the money,” Davy said.
“It was almost like State Farm tried to wear me down and I wasn’t going to wear down. I needed to be able to rebuild my home. That’s what I paid them. I was insured properly, and they just didn’t want to deal with it,” she said.
Davy was able to move back into her rebuilt home last June.
State Farm said it could not comment on Davy’s treatment because of privacy issues, but the carrier noted that the claims process is complex and takes time.
“State Farm’s commitment to our customers is the same for all claims. That commitment is to pay what we owe promptly, courteously, and efficiently. Claims, especially the total loss of a home, can be complex. The claim process can take time and close collaboration is necessary to make sure we do right by our customer,” the company said in a statement.