NORTHERN CALIFORNIA – On Tuesday state legislators from wildfire-damaged communities joined California Insurance Commissioner Dave Jones in introducing a legislative package meant to increase protections for the state’s disaster victims.
Sen. Mike McGuire and Assemblywoman Cecilia Aguiar-Curry, whose districts include Lake County, along with Sen. Bill Dodd, and members of the Assembly Jim Wood, Monique Limón and Marc Levin joined Jones to announce the Wildfire Survivors Insurance Recovery bills.
Altogether, the group unveiled a package that includes a total of 13 bills to be introduced this legislative session to strengthen consumer protections for wildfire survivors making insurance claims who struggle to recover, rebuild and move forward. Several of the pieces of legislation already have been introduced.
Jones said the Wildfire Survivors Insurance Recovery legislative package strengthens the laws protecting wildfire survivors in the insurance claims process and will improve their chances for recovery.
Lake County already had been through four devastating fires – the Rocky, Jerusalem, Valley and Clayton fires – by the time the Sulphur fire occurred in October, at the same time that devastating fires tore through neighboring Mendocino, Sonoma and Napa counties.
“Four of my counties – Lake, Napa, Solano, and Sonoma – were on fire in October,” said Aguiar-Curry. “It will take years for our communities to recover.”
State officials said the North Bay fires claimed 44 lives, with more than 14,700 homes and 728 businesses damaged or destroyed, totaling more than $9 billion worth of insurable damage.
This disaster struck while Lake and Calaveras counties were still in process of rebuilding from the Valley and Butte fires, respectively, of 2015, which destroyed more than 3,000 structures and 1,700 homes; in Lake County alone, about 1,300 homes were destroyed in the Valley fire.
Officials said the latest devastating fires have underscored the challenges homeowners face when trying to navigate the insurance claims process.
McGuire said the North Bay firestorm was the most deadly and destructive in American history.
He said it also has resulted in the largest debris cleanup since the 1906 San Francisco earthquake.
McGuire said fire survivors are struggling to provide detailed home inventories for insurance companies while dealing with the aftermath of the fires, managing debris cleanup, finding new homes and jobs, and caring for their families while living in 200-square-foot hotel rooms.
From Jan. 1 to Jan. 10, his office received 111 complaints – some of them horror stories – from fire survivors who feel overwhelmed about what is being required of them by their insurance companies. They’ve reported experiencing post traumatic stress disorder in having to relive the fires while cataloging their lost possessions.
“It’s simply too much to ask,” and that’s why people pay insurance each month to cover what their homes and valuables are worth, McGuire said.
He’s introducing SB 897 to allow homeowners to forgo itemized lists during a declared state of emergency by the governor and in turn automatically receive 80 percent of the policy limit. Without itemized lists, insurers have provided as little as a 30-percent payoff.
In recent weeks, some of the major insurance companies have begun to advance nonitemized policy payouts. “We are absolutely grateful for that,” said McGuire.
He said the bill would standardize that itemization process so families can fast-track the process of putting their lives back together.
Wood thanked Jones for his hard work, and being a partner throughout the effort with legislators.
The recent massive wildfires and mudslides “exposed significant gaps and deficiencies in our laws and how we protect our residents,” said Assemblyman Jim Wood.
Many of those impacted by the disasters would later find out that their insurance policies weren’t enough, with rebuilding much higher than expected.
He said one of the bills introduced, AB 1875, will require all insurance companies to offer as an option coverage for no less than 50 percent of the extended replacement cost for residential properties.
“Sadly, we know this is not the end of disasters in California and this bill, like others, will be able to provide an ability to start again,” he said.
Dodd, who formerly served in the Assembly and represented an area that included Lake County, said, “I really do believe that the state has a moral authority to act on this.”
He said they need to do everything they can to help victims of wildfires and other natural disasters to recover, and be proactive and ensure that those benefits are there for future disaster victims.
“When a major disaster strikes, we need our insurance companies to have our back,” Dodd said.
Dodd introduced SB 894 to reform insurance coverage by guaranteeing up to three years of living expenses after major disasters. It also requires insurance companies to provide victims with policy renewals for up to two years after a disaster. In addition, it would require companies to report to the insurance commissioner if they pull out of an area.
“Helping victims and communities recover quicker and more completely after disaster strikes – that’s what this is all about,” said Dodd.
Insurance commissioner addresses fire insurance availability issues
In some parts of rural California, getting fire insurance in the first place is becoming more of a challenge.
The introduction of the legislative package comes less than two weeks after Jones released a report addressing the growing problem of fire insurance availability and recommending legislative changes aimed at making fire insurance available in the wildland-urban interface.
Jones said nearly half of California counties have housing rated at high or very high fire risk.
"Californians are facing more severe, more unpredictable and more frequent wildfires," said Jones. "Add to the equation, increasing development in areas more vulnerable to fire and you can see why wildfires are now an everyday threat to life and property for Californians."
Over the past two decades, Jones said wildfires have caused significant insured damage in what is called the wildland-urban interface, where an estimated 3.6 million California homes are located and more than one million are identified as being at high or very high fire risk.
Jones said the California Department of Insurance is seeing an increasing number of complaints, feedback and other evidence from policyholders, consumer groups, public officials and other stakeholders that homeowners' insurance coverage in the wildland-urban interface is increasingly difficult to obtain and, if available, is unaffordable for many.
He said the inability to obtain affordable homeowners' insurance coverage creates great risk to the financial security of individual homeowners and the economy.
"Insurers are increasingly using computer models to assess the risk of fires for individual homes and deciding that homes in some areas face too high a risk," said Jones. "In the wake of last year's wildfires, we may see more areas of the state where insurers decline to write. The Legislature has given insurers broad latitude to decide whether and where to write fire insurance, therefore we are recommending new laws to improve fire insurance availability."
Jones has directed his department to undertake an in-depth analysis of the scope of the availability and affordability issue and develop proposed solutions to mitigate or solve these problems.
This analysis includes an extensive review of consumer complaints and feedback from stakeholders, and also included an in-depth analysis of the two major wildfire-risk models.
According to Jones’ report, just over 50 percent of Lake County’s 34,110 dwelling units are in the high or very high risk categories.
In Lake County, there has been increased concern about people losing fire insurance – both within the fire areas and outside of it – and facing huge rate increases.
Since the Valley fire, Lake County News has received a number of reports from longtime policyholders of various insurance companies suddenly having their policies canceled even when they never missed a payment or didn’t live within the fire area, or who had their rates raised dramatically. In one case, an insurance company canceled a policy on a longtime customer after an inspector said a stack of firewood 25 feet from the house was too close.
Jones’ report shows a wide range of insurance-related activity in Lake County for the years 2015 and 2016.
Based on Jones’ report, in 2015, the following insurance statistics were reported: new policies, 2,942; renewed policies, 22,134; nonrenewed (insured-initiated), 1,481; nonrenewed (insurer-initiated), 313.
That’s compared to 2016: new policies, 3,021; renewed, 21,652; nonrenewed (insured-initiated), 1,657; nonrenewed (insurer-initiated), 428.
Not yet available is data for 2017.
Nancy Kincaid, spokeswoman for the Department of Insurance, said she couldn’t provide statistics for complaints from Lake County regarding insurance policies.
So far, she said insurance companies haven’t indicated that they are pulling out of Lake County.
The new legislation
Synopses of the bills discussed by legislators on Tuesday are below.
AB 1772: Introduced by Assemblymember Cecilia Aguiar-Curry (D-Winters). The bill will give wildfire victims an additional year to rebuild their homes and businesses after a catastrophic wildfire and collect the full amount of insurance dollars to which they are entitled. It extends the amount of time a home or business owner has to rebuild an insured property from two to three years and receive the full replacement costs they are entitled to after a declared emergency. AB 1772 is expected to be heard in the Assembly Committee on Insurance in early spring.
AB 1797: Introduced by Assemblyman Marc Levine (D-Marin County). The bill will require insurers to provide updated replacement costs to consumers when policies are renewed.
AB 1799: Introduced by Levine. The bill requires insurers to provide a full certified copy of the insurance plan to policyholders so they know exactly what is covered.
AB 1800: Introduced by Levine. The bill makes insurance companies responsible for the full replacement value of the insurance plan regardless of where a family wants to purchase or rebuild a home. Levine said the bill grew out of some insurance companies saying that customers were not qualified for a full replacement value of their home if they decided to purchase or build in another location.
AB 1875: Introduced by Assemblyman Jim Wood (D-Healdsburg). The bill will require all insurance companies to offer as an option coverage for no less than 50 percent of the extended replacement cost for residential properties. In addition, it will require insurance companies to advise customers of this option and its cost before policies are issued or renewed.
SB 894: Introduced by Sen. Bill Dodd (D-Napa). The bill will require insurers to renew policies for disaster victims for a minimum of two years following the loss of a home, and it requires companies to report to the insurance commissioner if they subsequently non-renew or pull out of a market. It would also allow disaster victims to recover living expenses from their insurance company over 36 months, helping families make ends meet while they work to rebuild and recover. Lastly, Dodd’s bill would require an insurer to allow disaster victims to combine their policy limits for primary dwelling, other structures, contents, and additional living expenses, to pay for any of the covered purposes. The bill is expected to be heard in the Senate Committee on Insurance, Banking and Financial Institutions in March.
SB 897: Introduced by Sen. Mike McGuire (D-North Bay). The bill waives inventory claim form requirements during a declared state of emergency by the governor. It would allow homeowners the option of forgoing the itemization list and instead automatically providing 80 percent of the policy limit.
Assemblywoman Monique Limón intends to author a bill to require insurers to participate in a consolidated debris removal program authorized by a local government when there is a declared disaster. The bill would better organize and expedite the debris removal process.
Email Elizabeth Larson at This email address is being protected from spambots. You need JavaScript enabled to view it.. Follow her on Twitter, @ERLarson, or Lake County News, @LakeCoNews.
010418 California Department of Insurance Fire Availability and Affordability report by LakeCoNews on Scribd