California insurance chief urges insurers to extend living expense payments for 2017 fire victims

To pressure insurers and allay fears of 2017 wildfire survivors, California Insurance Commissioner Ricardo Lara urged insurance companies to provide a third year of temporary living expenses for them, as they continue to rebuild houses amid construction delays.

Lara on Tuesday night announced his request of home insurers during a closed-door meeting in Santa Rosa with a group of about 40 Sonoma County fire survivors, including block captains from local neighborhoods devastated by the fierce Tubbs fire in October 2017. That fire, the worst in state history at the time, destroyed 5,334 homes countywide. As of April 30, only 393 of those homes, or less than 10%, have been rebuilt.

Local survivors of the fires two years ago find themselves in a quandary because state law only requires insurers to pay up to two years of living expenses for them, and that period ends in October. Most of those residents rebuilding won’t have their new houses finished by then in the city’s fire-ravaged Coffey Park and Fountaingrove neighborhoods, or in nearby Larkfield, Mark West Springs and Sonoma Valley.

Last year, the state Legislature passed a blll sponsored by Sen. Bill Dodd, D-Napa, that requires home insurers to extend coverage for fire victims’ living expenses from two to three years. Although Dodd wanted the legislation to be applied retroactively to 2017 fire survivors, the powerful insurance industry lobby blocked that provision so Santa Rosa-area residents struggling with slow home rebuilding efforts are not helped by the 2018 law.

Since there’s no new legistative action planned this year in Sacramento on this critical insurance matter, the county’s Tubbs fire survivors will need to work individually with their home insurers regarding potential extensions of living expenses coverage. It’s unpredictable how many, ultimately, will be successful. Therefore, the state’s top insurance regulator coming here to listen to recovering fire victims and put public pressure on home insurers was quite welcome.

Jeff Okrepkie, president of Coffey Park’s neighborhood group Coffey Strong, said Lara’s visit and his fervent message to insurance companies shows the state is “behind” the North Bay 2017 fire survivors.

“The law allows for flexibility. While insurers cannot increase that amount of coverage under a policy, they can, as the commissioner requested, work with policyholders to provide more time for rebuilding,” said Nicole Mahrt Ganley, a spokeswoman for the American Property Casualty Insurance Association, a trade group representing about 60% of the property-?casualty insurers in the United States.

“Policyholders should always have a conversation with their insurer to find solutions.”

Some insurers’ homeowner polices, for example, provide a monetary amount for temporary living costs following an inferno or other natural disaster rather than a strict time limit.

Michael Gossman, director of Sonoma County’s Office of Recovery and Resiliency, said local officials hope that up to 40% of houses under construction since the fires two years ago wlll be completed by the second anniversary in October.

Notwithstanding the rebuilding progress this year, Lara told the small, invitation-only Santa Rosa gathering Tuesday: “We are continuing to push the envelope when it comes to forcing these insurance companies to be accessible and to listen to the unique issues that are being faced here in Sonoma (County) by so many of the residents.”

The insurance commissioner also made a second request to insurers, asking them to calculate home replacement-cost coverage by including land values to help 2017 fire survivors maximize their insurance coverage if they opt to buy an existing house rather than build a new one.

Lara’s nonbinding requests of home insurers appear similar to an effort by former state Commissioner Dave Jones, who pressured insurance companies to ease insurance claim requirements for line-item detailing of personal property losses during the 2017 fires. That tactic by Jones was somewhat successful.

County Supervisor Shirlee Zane said if insurers comply with Lara’s request it would especially help Fountaingrove residents because many of them rebuilding will not be able to move into their homes by October.

Beset by a range of challenges, such as higher underinsurance gaps for rebuilding and greater difficulty in reconstructing their home foundations, many of these hillside property owners are not yet at a point to even start rebuilding, said Zane, who represents the area.

In addition to concerns about possible expiration of insurance coverage for temporary living expenses, some worry that insurers could cancel homeowner policies for a number of the 2017 fire victims after the second anniversary of the disaster. It’s well known that after billions of dollars of fire losses in 2017 and 2018 statewide, insurance companies are reassessing their escalating wildfire property risks in California. And that could mean higher annual policy premiums or policy cancellations for owners of properties here and statewide in the areas most prone to fires.

At this point, local officials said they are not aware of any 2017 fire survivors who have been informed by their home insurer that policy cancellation was forthcoming after coverage for living expenses ends in October.

“My inclination is that they wouldn’t stop (the coverage) during the mid-build,” Okrepkie said.

Meanwhile, Dodd sounded an optimistic tone Wednesday, hopeful the requests made by the insurance commissioner and and him would resonate with home insurers and they would “do the right thing” and provide 2017 fire victims another year of coverage for temporary living expenses.

“With labor shortages and other outside factors delaying the rebuilding process, time is running out for many who lost their homes in the 2017 fires,” Lara said in a statement Wednesday. “I urge insurers to show good faith with their policyholders by extending living expense payments to those who have endured so many delays beyond their control.”

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