26 home insurers extend temporary housing payments for North Bay fire survivors

Twenty-six home insurers have extended payments to cover temporary living expenses for 2017 North Bay fire survivors whose new homes are still unfinished, the state insurance commissioner said Friday.

However, three of the region’s biggest property insurance companies - State Farm, Allstate and Nationwide - are among a group of 12 insurers who rebuffed a request by Insurance Commissioner Ricardo Lara to voluntarily continue paying temporary housing costs for fire survivors beyond the two-year state requirement.

“That 26 of the 38 have chosen to do the right thing is admirable,” said Brad Silvestro, an Allstate customer whose Rincon Valley home is not yet complete. “That the remaining insurance companies have chosen to turn their backs on people at their most vulnerable time is a travesty.”

Lara made his request this summer, asking insurers to extend temporary living expense coverage for a third year to match a state law that took effect last year. Many people who lost homes in the 2017 fires - including the fierce Tubbs blaze that burned through a wide swath of Santa Rosa - are in a bind because they have encountered numerous construction delays on account of a labor shortage, permitting snafus and environmental issues.

Lisa Frazee, a State Farm customer who organized a rally at the Capitol urging insurers to extend benefits, said her Wikiup home was among dozens that burned in a geological hazard zone, adding red tape to an already laborious rebuilding process. Frazee is more than a year away from moving home, and is trying every conceivable avenue to get her benefits extended, including blaming the insurance company for delays and potentially seeking mediation.

“The only way, at this point, that we are going to get any traction is to shame these insurance companies,” a frustrated Frazee said.

After holding out hope right up until last week’s two-year anniversary of the North Bay infernos, the insurance commissioner released a final list of insurers who agreed to continue paying monthly housing expenses. Lara’s office cautioned that policyholders should contact their home insurance agents to get specifics. The agreement by the 26 ? insurers to extend monthly living expenses comes with a condition: They will continue to pay temporary housing costs up to coverage limits of individual fire survivors’ homeowner policies but won’t increase those dollar limits.

Rex Frazier, president of the Personal Insurance Federation of California, which represents insurance companies on both sides of the issue, said there is a common denominator among insurance companies that haven’t agreed to extend benefits: their contracts have no capped maximum benefit.

“It’s wholly believable that someone has done everything they can, been diligent, and their house still hasn’t been rebuilt,” Frazier said. “At the same time, (insurance) companies are paying huge amounts in ALE (additional living expenses) ... the rental amounts people are charging is very high.”

Although 26 of 38 insurers said they would provide more living expense payments to the 85% of Sonoma County fire survivors continuing to rebuild houses, State Farm, Nationwide and Allstate declined. All three have been strongly criticized because they cover a large portion of those survivors.

State Farm - which had the most homeowner claims from the 2017 fires - and Nationwide alone incurred about a third of the more than $15 billion in total insured losses from the North Bay blazes. Altogether, the 12 insurers that have stopped temporary housing payments after two years represent 42% of the insured losses from those fires, according to state regulators.

“Two years is clearly not enough time for people to get back on their feet in a disaster of this magnitude,” Lara said in a statement. “The voluntary action by 26 insurance companies to extend additional living expense time limits is a step that will bring relief to those with benefits remaining while they continue to rebuild.”

Frazier reiterated a common line among insurance companies when asked why some wouldn’t extend benefits: they’re just following the contract.

Those agreeing to extend living expense payments include big insurers Farmers Insurance Group and CSAA, the AAA insurer for Northern California. They are joined by six other insurers with a significant number of policyholders whose homes burned in the fires two years ago: Liberty Mutual/Safeco; Travelers; USAA; Capital Insurance Group; Chubb and The Hartford.

Overall, the 26 insurers continuing living expense payments represent 58% of overall insured losses from the North Bay fires.

The 2017 wildfires destroyed 5,334 homes in Sonoma County and killed 24 people. Some 1,200 homeowners in Napa, Lake and Mendocino counties lost their homes, too, and are affected by the two-year deadline for temporary housing cost reimbursement from insurers.

Sonoma County fire survivors have encountered numerous insurance headaches in the fires’ aftermath. Many people discovered their homes were underinsured, some by more than $1 million.

Sonoma County Supervisor Susan Gorin, who is part of that group, offered praise for the 26 companies agreeing to extend benefits. For the others, including her own company, Nationwide, she said she wants to “start using four-letter words.” Gorin didn’t have much sympathy for companies worried about high ALE costs.

“My response is show me how much you’re paying in ALE, and show me how much you’re paying to advertise your company,” Gorin said. “This is the worst advertising strategy ever. It’s penny wise and pound foolish.”

State lawmakers led a push last year to require home insurers to extend living expense payments from two to three years for people who lost homes in the 2017 and 2018 infernos. But the insurance industry lobby succeeded in getting the retroactive language deleted from legislation before it was approved by the state Legislature and signed into law by then Gov. Jerry Brown. Frazier pointed out state law required 12 months of living expenses before 2004, and argued more attention should be focused on how the state continues to squeeze insurance companies through rate suppression.

The three-year extension went into effect Sept. 21, 2018, so people who lost homes in the Camp fire in Paradise last November were included. Since North Bay fire survivors were left out, Lara asked insurers to help them continue rebuilding by voluntarily extending housing expense payments for those who still need them.

Sen. Bill Dodd, D-Napa, introduced the provision that would have forced insurance companies to extend benefits. He commended Lara for his advocacy.

“I appreciate the insurance commissioner for joining us in pushing the industry to do the right thing,” Dodd said in a statement. “It shouldn’t be so hard. But I’m glad the companies that did finally came around.”

Staff Writer Tyler Silvy contributed to this story. You can reach Staff Writer Bill Swindell at 707-521-5223 or bill.swindell@pressdemocrat.com. On Twitter @BillSwindell.