Many of the Northern California homeowners who fell victim to the recent wildfires have lost everything. While most homeowners’ insurance plans cover fire damage, there may be additional charges for people living in high-risk areas.
Since it’s recommended to file a homeowners insurance claim for major damage as soon as possible, with most policies including a 14-day reporting window that makes sure the damage doesn’t worsen over time, the large amount of people filing claims for fire damage has the insurance industry working very quickly to help policyholders.
While it’s too early to know how much the recent fires will cost, insurance providers have received billions of dollars in fire-related claims from California wildfires over the years. According to The San Francisco Gate, “the state’s costliest fire to date, cost $1.7 billion at the time or $2.67 billion in 2015 dollars.” And because of recent droughts, California is at such a high risk for forest fires that insurance companies have already become pickier about which homes they will cover.
“All those commercials about insurance companies offering peace of mind when things like this happen — those are just ads,” said Amy Bach, who is the executive director of United Policyholders, a San Francisco-based advocacy group. “In reality, insurance policies are written by teams of lawyers, and it can be rough for homeowners.”
The California FAIR plan, which helps homeowners in high-risk areas who can’t find coverage, covers up to $1.5 million for a structure and its contents. While this may seem like a lot of money, in some cases it won’t be enough for full replacement of a lost home.
As devastating fires continue to burn hundreds of homes across California, more and more people are calling their providers to go over their coverage policy.
State Farm insurance agent, Donna Randolph, recommended to policyholders that they should document personal belongings, including family photos, financial documents, and other key personal information. Another important suggestion Randolph adds is to have a plan in place in case a fire breaks out. This plan should include having a bin ready to put heirlooms and priceless mementos in that should not be left behind.
Policyholders are also being encouraged to make sure their coverage is up to date and that no serious changes have been made to their policies. Unfortunately, it’s not unheard of for an insurer to change the terms of a policy during the renewal process, which may leave policyholders finding themselves more at risk than they originally thought.
“Insurance companies have had enough experience with fires in California to do a good job of resolving claims,” said Bach at United Policyholders. “But that’s still not always the case.”