North Bay fire survivors race to rebuild homes as insurance payments wind down

Madonna Day desperately wants to return home.

The 86-year-old can look around her Sonoma County property near the Napa County line along Highway 128 and see Mount St. Helena not far in the distance.

She also can see the spot where the dirt was leveled to begin construction of her new home in Knights Valley - to replace the one destroyed in the Tubbs fire two years ago. She is eager to see the foundation rise on the same tract where she has lived since 1971.

But Day said it may be another year before she is in her rebuilt home. She's been wrangling to get reimbursements from her insurer, State Farm, and trying to finalize with an architect the design for a new house. Then there's her biggest worry: State Farm notified her June 7 it will not cover her monthly home rental expenses beyond Sept. 1, more than a month before the second anniversary of the North Bay fires.

“I don't know where I am going to go,” said Day. She estimates she's underinsured by as much as $1.2 million for her rebuild and needs every cent she can get from State Farm to help cover the cost.

“That's what I lay awake thinking about,” she said.

Day is one of hundreds if not thousands of North Bay fire survivors in the same potentially dire financial situation. Their new houses won't be ready to move into by October, the two-year mark after the fires, and the point when home insurers no longer are obligated by California law to pay for monthly living expenses. The coverage is crucial because most fire victims still are paying a monthly mortgage on their homes gutted by flames.

In Sonoma County, the 2017 fires destroyed 5,334 homes and killed 24 people. At best, 40% of fire survivors countywide are expected to move into new houses by the two-year anniversary of the fires, Michael Gossman, director of the county's Office of Recovery and Resiliency, said last month. In addition, some 1,200 homeowners in Napa, Lake and Mendocino counties also lost their homes in the 2017 blazes and many are struggling to finish rebuilding by the two-year anniversary.

Last year, state Sen. Bill Dodd, D-Napa, led the legislative push to require home insurers to extend living expense payments from two to three years for people who lost a home in the 2017 and 2018 infernos. But before the bill was signed by Gov. Jerry Brown, the powerful insurance lobby blocked the attempt to retroactively cover 2017 fire survivors.

After arm twisting by local officials, new California Insurance Commissioner Ricardo Lara on May 28 came to Santa Rosa to meet a small group of local fire victims and announce his urgent request to home insurers to voluntarily provide a third year of monthly living expenses for those displaced by the 2017 infernos.

Lara has no authority to force insurers to extend that benefit. But, he told The Press Democrat, “It is the right thing to do. It's the human thing to do.”

This month, Lara said, his office is “making good headway” in discussions with insurance company officials but he wouldn't divulge specifics. Still, the clock is ticking and area residents like Day are starting to receive letters from their home insurers indicating temporary home rental payments soon will end.

Marc Selivanoff of Santa Rosa said he and his family intend to move into a camper on their vacant plot in Hidden Valley Estates after a Nationwide affiliate stops paying their monthly living expenses later this year. He thinks his family might have to live in the camper for a year before their new house is built.

“Not our ideal, but certainly better than some will be able to do,” Selivanoff said by email.

Compliance by insurers

The Press Democrat contacted the 10 largest home insurance companies in the North Bay to ask officials of each if they would comply with the insurance commissioner's request to pay 2017 fire victims a third year of living expenses. Only CSAA Insurance, the AAA insurer for Northern California, and Farmers said they definitely will extend another year of temporary rental expenses.

Hartford and Chubb officials said their respective home insurance policies typically don't set a fixed time limit on living expense payments. Meanwhile, Travelers includes a maximum amount of living expenses in its policies rather than setting a time limit.

Antonio Wong, a CSAA policyholder in Santa Rosa, said he plans to remain in his Rohnert Park rental for another year as construction continues on his Fountaingrove home.

“It seems like some insurance companies have not been bending at all,” Wong said, however, CSAA has been “pretty good.”

That's not the sentiment of the State Farm and Nationwide policyholders interviewed for this story. They said they had been notified by their insurers that their living expense payments would end at the two-year mark.

Representatives of each company said in interviews they are engaged in talks with the state insurance commissioner and his aides to address his concerns over the discontinuation of living expense payments.

“State Farm understands that there are customers facing unique circumstances and situations that are not within their full control,” company spokeswoman Angie Harrier said in a statement. She declined to specifically address the particulars of local policyholders like Day, citing the company's customer privacy rules.

Day said of her ongoing tussle with State Farm: “It's not fair that you have to battle for a rebuild. It's rather cruel.”

Travelers intends to pay temporary home rental costs “until customers no longer need them or the maximum dollar amount of their (rental) coverage is reached,” spokeswoman Sperry Mylott said.

Many homeowner policies offer an overall rental allowance as opposed to a time limit. If fire survivors reach the spending cap listed in their policies for temporary rental costs, the insurance commissioner would like insurers to boost the cap or tap other unused coverage in policies to continue the monthly rental payouts, Lara's spokesman Michael Soller said.

Tom Schiff said he acted quickly to rebuild after his Fountaingrove home in Santa Rose burned in the Tubbs fire. He selected a builder days after the disaster and an architect about two weeks later.

“We jumped on this thing with both feet,” Schiff said of rebuilding.

Yet there were complications. Winter rains this year delayed construction at least three months because there was no roof installed at the start of the stormy weather, he said. His insurer, Safeco, owned by Liberty Mutual, recently notified him by letter his rental insurance would expire at the end of October. His builder said finishing his house by Christmas was a best-case scenario.

Schiff expects to stay in his temporary home in Healdsburg through the end of the year under his homeowner coverage without having to ask Safeco for more money.

A spokesman for Safeco and Liberty Mutual said they are evaluating policyholder hardship claims on a case-by-case basis. The companies take “the approach to extend (rental) benefits beyond policy terms upon request when the rebuilding or repair process is hindered by circumstances beyond our customers' control,” spokesman Glenn Greenberg said in a statement.

Facing coverage cap

Although Jack Pond will fare better than many 2017 fire survivors when he moves into his new house in Hidden Valley Estates by mid-September, he still has an insurance headache. Pond's homeowner policy through Boston-based Homesite provided a dollar limit for temporary living expenses. The payments will end on July 12, after he's already received two one-month extensions for May and June.

The rent on his temporary townhome of $3,100 a month is higher than his monthly mortgage. But he said there were few lodging options for his family after the fire. They spent one month in a hotel. He also had rented furniture costing $800 a month that he was able to reduce to $500 at the beginning of the year.

Ken Muth, a Homesite spokesman, said the company worked with Pond and made sure to notify him that he was coming up on his cap for rental expenses, but it could not go beyond that financial limit.

“Our obligation is to be fair to all of our customers and treat all of our customers fairly and consistently,” Muth said.

During the next few months, the conversations between the state insurance commissioner and home insurers are likely to get increasingly fraught for fire survivors. While Lara is urging insurers to extend temporary living expenses to 2017 fire victims, many companies will be asking him for permission to boost annual homeowner insurance policy premiums statewide. There have been more than 100 requests from insurers for rate increases the past two years - more than double the number of requests during the previous two-year period.

Those homeowners living in high wildfire risk areas statewide should expect double-digit annual home insurance premium increases, state insurance officials have said.

Wildfire-related losses, risks

The rate increases come as California insurers look to recover staggering losses amid escalating wildfire risks. The Tubbs fire alone, for example, resulted in an estimated $9.5 billion in insured losses, putting it behind the 2018 Camp fire in Butte County as the second-costliest wildfire in U.S. history, according to the Insurance Information Institute, an industry trade group.

The Atlas fire, which killed seven people in Napa County in 2017 and destroyed nearly 800 structures, ranked as the fourth-costliest blaze, with estimated insured losses of $4.5 billion, according to the insurer trade group.

Surprisingly, before the 2017 and 2018 fires, homeowners in California experienced a much slower rate of annual premium increases compared to policyholders in other states, according to an industry comparison. In 2009, the Golden State ranked No. 14 in average annual homeowner premium cost and dropped to No. 32 in 2016, said Rex Frazier, president of the Personal Insurance Federation of California, a group that lobbies regulators on behalf of property insurers.

“That is the balance they (the state insurance department) are trying to juggle,” Frazier said. “At some point, something has got to give.”

Day, who worked at Beringer Winery in St. Helena in the 1980s and 1990s, said she hasn't yet contemplated what's next for her if State Farm doesn't extend monthly payments for her rental home in St. Helena. She knows that she doesn't want to move again, after living in at least four different places since the 2017 fires - unless it's into her newly rebuilt home.

“They are going to take me out screaming,” she said. “They aren't going to move me one more time.”

You can reach Staff Writer Bill Swindell at 707-521-5223 or bill.swindell@pressdemocrat.com. On Twitter @BillSwindell.