PD Editorial: Shame on insurers for inflexibility with fire victims

Thousands of victims of the 2017 firestorm are about to be victimized again.

The second anniversary of the start of the catastrophic fires is one week away, and most insurance companies are preparing to cut off rental assistance for policyholders whose homes burned down. Fire victims could soon be on the hook for mortgage payments on homes that burned, the cost of replacement rentals and any out-of-pocket expenses for rebuilding.

More than 5,300 homes were lost in Sonoma County, and 6,400 burned in Northern California in the October 2017 fires. Two months later, 1,000 homes burned in Southern California.

No one who understood the situation believed all of them could be rebuilt in 24 months.

But the state law in effect at the time required insurers to provide only 24 months of rental assistance, and requests for extensions have been almost universally denied.

Only Farmers and CSAA have granted extensions, Staff Writer Bill Swindell reported.

The insurers are within their rights, but their business decisions don't match their marketing schemes, and dozens of fire victims gathered Friday evening in Old Courthouse Square to see if public embarrassment might soften their insurers' resolve.

Jim Scally, whose family lost their Coffey Park home in the Tubbs fire, carried a sign reading, “I was a State Farm customer for 45 years. State Farm cut me off after 24 months.”

Another sign said, “All State, the empty hands people.”

“Nationwide … not on my side,” said Sonoma County Supervisor Susan Gorin, who lost her Oakmont home in the Nuns fire and doesn't expect to be in her new house for another year.

This is just the first wave of victims to run up against the 24-month limit. The deadline will arrive soon in Los Angeles, Ventura and Santa Barbara counties, followed next year in Redding, Paradise and other communities around the state.

Meanwhile, some insurers are canceling policies in fire-prone areas, and the New York Times reported Sunday companies that trim trees and do other power grid maintenance work are having trouble securing insurance.

Twenty-four months usually is enough time to rebuild when a house burns down, but not when entire neighborhoods are razed.

Processing all the claims after the North Bay fires took months. So did debris removal. Demand for contractors, labor shortages and a wet winter in 2018 added more delays. In Santa Rosa's Fountaingrove neighborhood, the discovery of contaminated water pipes put some property owners on hold for weeks.

Through September, The Press Democrat reported Sunday, 874 housing units have been rebuilt - about 16%. Another 1,946 are under construction.

Under a law that took effect this year, insurers must provide 36 months of replacement housing for a home destroyed in an officially designated disaster area. As introduced by state Sen. Bill Dodd, D-Napa, the bill would have applied retroactively to 2017 fire victims. But insurers persuaded lawmakers to apply the new law only prospectively, and most insurers ignored pleas from state Insurance Commissioner Ricardo Lara to accommodate victims of the 2017 and 2018 fires.

Only about 1 in 6 victims of the 2017 fires managed to rebuild within 24 months. In fighting Dodd's bill, and refusing help for policyholders, insurers missed a chance to cement customer loyalty by doing a public service. If they don't reconsider, we urge landlords to be flexible with tenants who are still trying to rebuild. For those who were spared in 2017, it's a good time to ensure that your policy is up to date and adequate to cover potential losses.

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