California Wildfire Victims Claim Insurance Companies Misled Them
SAN DIEGO (AP) -- Many Southern California homeowners who thought they were fully insured against natural disasters have discovered after last year's wildfires that their policies left them in the lurch - in some cases hundreds of thousands of dollars short of what they need to rebuild.
Dozens of homeowners told California Insurance Commissioner John Garamendi during public forums over the last week that insurers wrote policies based on their calculations of a home's ``replacement cost,'' only to learn that the insurers' estimates were grossly inadequate.
Consider Don Halte, 64, who said the replacement cost listed on his Farmers Insurance policy was $200,000 below the actual cost of rebuilding his home in Crest, a mountain community east of San Diego, which was destroyed last October.
``I thought replacement meant replacement,'' he said to applause from an audience of about 300 people Monday night at Shadow Mountain Community Church in El Cajon, a San Diego suburb. ``A gentleman here has a dictionary. Maybe I should look at it.''
The communities east of San Diego were among the worst hit by the October wildfires, which destroyed more than 3,600 homes across Southern California.
Lynda Martin, 46, said she called State Farm Insurance only two weeks before her home burned in Alpine, also east of San Diego. She asked if her coverage was adequate, noting that the assessed value of her home had more than doubled since she bought the policy about eight years earlier.
Martin said she was told that she had ``excellent coverage'' and was discouraged from buying more. As it turns out, she says it will cost $485,000 to replace her home, well above her policy's listed replacement cost of $209,950.
After three forums in San Diego County and one in San Bernardino County, Garamendi said he was launching a special team to investigate complaints, promising a ``complete, thorough audit.'' If investigators uncover patterns of wrongdoing, insurers could be barred from doing business in California or be ordered to pay heavy fines, he said.
``I'm giving (the insurance companies) bad marks,'' said Garamendi, who only two months ago praised the industry for its response to the fires. ``I've gone through four of these hearings and these problems are serious, they're pervasive, and the biggest insurance companies in this nation are not properly handling claims. ... Clearly, they have disobeyed the law.''
Some homeowners told Garamendi they have been assigned five or more adjusters, creating long delays as each one got up to speed. Others criticized insurers for haggling over itemized lists of personal belongings lost in the fires.
But most complaints concerned allegations that insurers misled homeowners into believing they were fully covered. Four law firms recently teamed up to sue carriers on behalf of wildfire victims who say they were wrongfully left unprotected.
Garamendi said insurance companies may have ``low-balled'' the estimated cost of replacing homes in an effort to sell more policies.
Insurance company officials who attended the forums declined to discuss individual cases but denied widespread wrongdoing. A State Farm spokesman, Bill Sirola, said it made no sense to low-ball the replacement cost because the company would effectively be denying a chance to collect higher premiums.
