Insurance relief measures for California fire victims yanked or gutted in Legislature

The state Legislature will provide little relief to North Bay fire victims who have found themselves underinsured and overly burdened by their insurance policies after two proposed bills encountered strong lobbying in Sacramento from the powerful property-and-causality industry.

State Sen. Mike McGuire, D-Healdsburg, on Thursday night said he declined a compromise with the industry, a mandate he said was laid down by Sen. Steven Glazer, D-Orinda, the insurance committee chairman, to advance the legislation.

McGuire’s bill (SB 897) would have made insurance companies pay out at least 80 percent of the maximum limit under a homeowner’s personal property coverage without requiring policyholders to itemize their losses.

When insurance companies insisted on amendments that “watered down the bill close to useless, we rejected them,” McGuire said.

“This fight is far from over and there is no way in hell that we are going to back down,” McGuire said. Other communities around California one day will suffer similar wildfire damage, “which is why this state may eventually need to put this on the ballot for voters to decide.”

The McGuire bill was a response to local fire survivors who argued that compiling a list of lost items proved too burdensome and traumatic as they attempted to rebuild in the aftermath of the nation’s costliest wildfire.

State Insurance Commissioner Dave Jones also blasted the insurance industry for their position. “Insurers opposing ?SB 897 have shown their true colors in efforts to defeat this common-sense legislation - their priority is profit over the needs of their policyholders who have been through hell,” Jones said in a statement.

McGuire’s decision follows the Senate passage on Tuesday of a watered-down bill (SB 894) sponsored by Sen. Bill Dodd, D-Napa. The changes mean the legislation will have less impact for current fire survivors.

Dodd’s bill, which now heads to the Assembly, would increase insurance coverage for rental living from two years to three - a crucial provision because most builders believe that not all the North Bay homes will be rebuilt by October 2019.

It also requires companies to renew policies for at least two years. Current law allows for only one year, after which the carrier could cancel the policy.

As originally proposed, the Dodd legislation would have applied retroactively to July 1, 2017, to benefit the almost 6,200 North Bay homes lost in last year’s wildfires.

But to secure passage, Dodd had to remove the retroactive provisions to all but one item - the extended time before carriers can cancel policies.

An earlier version of the Dodd bill also would have allowed policyholders to combine their homeowner policies for different coverage areas - such as their personal property, living expenses and outside buildings - to pay for their primary dwelling. The measure was in response to the thousands of fire victims who have found themselves underinsured, some by hundreds of thousands of dollars.

But Dodd was forced to narrow that language so that the combination of insurance payments would apply to actual losses accrued, not the maximum amount listed under each line item of a policy.

As the Dodd bill heads to the Assembly, proponents fear that the last remaining retroactive provision will be removed because of industry lobbying.

Amy Bach, executive director of United Policyholders, a nonprofit consumer protection group, said her organization supports the bill as ?currently written.

“If it gets further watered down,” she said, “we may pull our support.

Bach called the demise of the McGuire bill disappointing, maintaining that the insurance company has shown it can provide the amount of support the bill proposed for fire survivors.

“We know they should be done,” she said of the proposals. “These are things that make it easier for people to recover.”

McGuire said the insurance companies wanted 25 percent to be the top rate they would pay on a policy’s contents limits without a inventory of lost belongings.

He said Glazer, the committee chairman, proposed raising that to 50 percent of the policy’s maximum limit.

But McGuire said even that proposal would create a “ridiculously low threshold in perpetuity across California.”

He noted that four out of five North Bay fire survivors got a considerably greater amount - 75 percent of their payout limits for contents without listing the lost items.

According to a United Policyholders survey, 80 percent of victims had yet to settle their claims six months after the fire. Builders say the delay in settling claims has hampered rebuilding efforts.

In the aftermath of the fires, under pressure from Jones, the insurance industry was forced to boost their payouts of personal property limits without itemization. Most carriers have paid from 50 percent to 100 percent of personal property limits without itemization.

Large providers such as State Farm have paid as much as 75 percent, while The Travelers was at 50 percent. Farmers, Liberty Mutual/SAFECO, Chubb and Allstate all were reported to have paid out 100 percent without requiring much inventory requirements.

More minor bills have passed out of the Assembly with less opposition. They include one by Assemblyman Marc Levine, D-San Rafael, that would ensure homeowners are regularly provided an updated replacement cost estimate to rebuild their home.

Insurance companies are not currently required under law to produce or regularly update a replacement cost calculation for homeowners.

You can reach Staff Writer Bill Swindell at 707-521-5223 or bill.swindell@pressdemocrat.com. On Twitter @BillSwindell. You can reach Staff Writer Robert Digitale at 707-521-5285 or robert.digitale@pressdemocrat.com. On Twitter @rdigit.