CA | As the second year anniversary of the Camp Fire recently passed with many wildfire survivors still working to rebuild or relocate their homes, Insurance Commissioner Ricardo Lara issued a Notice to all residential property insurance companies requesting they consider homeowners’ reasonable delays in receiving payment of benefits from the Fire Victims Trust. The Fire Victims Trust was established as a result of Pacific Gas & Electric Company (PG&E) filing bankruptcy following the devastating 2017 and 2018 California wildfires in order to help consumers recover loss amounts that exceed their insurance policy benefits.
Due to circumstances beyond the control of many of the affected policyholders, including extensive damage to structures and properties resulting from the wildfires, a severe shortage of building contractors and building supplies in the immediate area, and a debris removal process that has taken several months longer than anticipated, it is taking policyholders longer to repair and rebuild destroyed homes than it would typically take in a non-disaster event or a less extensive disaster event.
“Homeowners still facing delays in rebuilding from the massive 2017 and 2018 wildfires now have more support in piecing their lives back together through the Fire Victims Trust,” said Insurance Commissioner Ricardo Lara. “I urge policyholders who are experiencing delays in accessing their policy benefits to contact my Department for further assistance, including if they believe their insurance company is unnecessarily delaying payment of claims rightfully owed to policyholders.”
The Notice includes circumstances where the policyholder is waiting for funds from the Fire Victims Trust or where the insurance company has not fully paid all estimated replacement cost benefits. These include the remaining balance due on replacement cost, extended replacement costs, and building code upgrade cost benefits, up to all policy limits. Commissioner Lara also requested that all residential property insurance companies extend the time for policyholders who suffered a total loss in the 2017 and 2018 wildfires to collect Additional Living Expense (ALE) and full replacement cost benefits under these same circumstances beyond the control of many wildfire survivors. In essence, the Trust is authorized to pay a policyholder only after confirming that the amount of policy benefits the policyholder received from their insurance company is inadequate. However, several insurance companies are withholding payment of policy benefits to their policyholders until the policyholders completely rebuild their homes, but the policyholders are unable to complete their rebuild without proceeds from the Trust, leaving policyholders in an untenable situation.
In a separate action, Commissioner Lara announced that 45 companies have complied with his October 2 Notice to help wildfire survivors who are overwhelmed with the task of navigating the claims process, by providing up to 100 percent of personal property coverage limits without a detailed inventory to those who suffered a total loss of their home.
“I commend many insurance companies for stepping up to do their part to help policyholders by providing benefits without requiring an onerous home inventory in order to have their claims paid,” said Commissioner Lara. “Cutting red tape is an important step to help wildfire survivors access their crucial insurance benefits and get back on their feet quicker.”
The recent California wildfires have destroyed entire neighborhoods and devastated several communities in dozens of counties across the state. The California Department of Insurance continues to receive numerous complaints from policyholders about the monumental task of identifying every item of personal property they may have lost in the recent wildfires to collect the replacement cost of such items. For major wildfires in the past handful of years, a large number of insurance companies continue to make significant efforts to accommodate their policyholders by offering up to 100 percent of contents limits without an inventory, while giving policyholders the ability to recover additional benefits if they subsequently complete a full inventory.