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Losing less in a wildfire may mean losing more insurance

On Behalf of | Feb 27, 2019 | Firm News

Insurance companies certainly have their work cut out for them after a California wildfire. Whereas most wildfires in the nation only burn down a couple of houses and some property, recent disasters in the Golden State have eradicated entire neighborhoods and killed dozens of people within days. Last year, thousands of unfortunate former homeowners contacted their insurance agents as they began the slow and painful process of rebuilding their lives.

Some people were lucky and only had their home partially damaged by the intense flames. However, they weren’t so lucky when it came to the recovery process. One story demonstrates how insurance companies prioritizing victims can lead to others suffering in the long run.

Small losses are still losses

National Public Radio recently highlighted a couple in Paradise who felt fortunate upon seeing that their house was mostly intact after one of the most destructive fires in California history, the Camp Fire. Unfortunately, they received a letter from their insurance company weeks later that they weren’t getting a renewal on their homeowner’s coverage. They spent weeks trying to find new insurance companies to cover for their damages until they came upon one that requires more than double of what they were paying before. They ultimately decided it wasn’t worth it and put their house up for sale.

Experts agree that the main reason it went down like this was because insurance companies prioritize total loss victims. Some even agree that the couple may have had an easier time recovering if their whole house burned down.

Will it happen again?

In the latter half of 2018, California passed several bills to make recovery easier for homeowners that lose their houses in a wildfire. Some of these include requiring insurance companies to renew their client’s coverage if their property lasted through the wildfire and allowing people who had their homes completely burned down to renew their homeowners policy for 2 years. Unfortunately, these didn’t go into effect until 2019, so many current and former homeowners in Paradise had their companies bail on them before the state could punish them.

If there’s any good news that came out of this, it’s that future victims will have less to worry about with these newer laws in place and increased awareness of the questionable actions taken by insurance companies. People living in areas close to wildfire hazards should review their legal options just in case the worst happens to them.