How to find or keep fire insurance and How to protect yourself from scam artists following wildfire damage
After several years of record-breaking California wildfires, insurance companies have responded by imposing huge premium increases on property owners, or even worse, flat-out denying coverage and canceling policies. Here are some tips to help property owners maintain their current insurance plan or, if necessary, find a new one.
1. KNOW YOUR RIGHTS!
If your insurance company is not going to renew the policy on your home, they must notify you in writing at least 45 days before the expiration date. If you didn’t receive the proper notice, contact the California Department of Insurance (DOI) at 1-800-927-HELP or online at www.insurance.ca.gov. Check to see if your policy has a guaranteed renewal provision. You may also be entitled to a renewal under laws applicable to homes that are lost in a declared disaster.
2. CONTACT YOUR INSURANCE COMPANY IMMEDIATELY
If you receive notice of a rate increase or non-renewal, get in touch ASAP to see if there are fire-hardening steps you can take to change the company’s decision.
3. Start shopping for insurance early!
Filling out applications and getting quotes takes time. Working with an insurance agent can speed things up. The DOI website (Consumers section) has a tool to help you find insurance agents and brokers near you. Check to see if the agent works exclusively with one insurance company or has access to multiple carriers. Keep track of which insurance companies are being contacted to make sure you’re conducting a thorough
4. CHECK FOR POLICIES WRITTEN BY ADMITTED INSURANCE COMPANIES
Admitted insurance companies are backed by the California Insurance Guarantee Association (CIGA), which provides protections if the carrier becomes insolvent. Check the Residential Insurance Contact List on the DOI website for a list of admitted insurance companies.
5. MAKE SURE YOU ARE NOT UNDERINSURED
Before selecting a policy, make sure it will cover the likely cost to rebuild your home in compliance with current building codes. Consider insuring your property for replacement cost value, not just depreciated actual cash value.
6. COMPARE TYPES OF COVERAGE AND LIMITS
If you have any questions, ask your insurance agent. For example: Will the policy cover the cost of rebuilding your home to its pre-loss condition? Does it cover demolition and debris removal? Is there a coverage limit on temporary rent and expenses while the home is being repaired? What causes of loss are not covered?
7. CHECK SURPLUS LINES INSURANCE OPTIONS IF NECESSARY
Surplus lines (aka “non-admitted” ) carriers do not have CIGA protection, but they often have more flexible offerings and may be the best solution. If you can’t obtain insurance from an admitted carrier, consider a surplus lines one; just make sure to investigate the overall financial strength by checking A.M. Best at www.ambest.com or a similar service.
8. USE THE FAIR PLAN AS A LAST RESORT
If you’re out of options, contact California FAIR Plan at 1-800-339-4099. The FAIR Plan policy can be expensive, and it only covers certain losses by fire and smoke so you will need to buy Differences in Conditions (DIC) insurance to cover other perils such as theft and liability
Unfortunately, natural disasters present opportunities for scammers to take advantage of people when they’re at their most vulnerable. If your house suffers damage from a wildfire, take the following steps to ensure anyone offering grant money or anyone hired to work on repairs is legitimate.
TO MAKE SURE YOUR HOME INSPECTOR IS LEGITIMATE:
- If a housing inspector comes by and claims to represent the Federal Emergency Management Administration (FEMA) or the Small Business Administration (SBA), ask to see the inspector’s identification badge, which all federal employees and contractors are required to carry.
- Remember that FEMA and SBA staff will never ask to see your banking information or charge you for disaster assistance. Do not give out your personal information.
- Know that FEMA housing inspectors will not hire specific contractors to fix your damage.
TO MAKE SURE YOUR CONTRACTOR IS LEGITIMATE:
- Deal only with licensed contractors. Ask to see physical verification of the person’s license.
- Check that the license is valid by calling the Contractor’s State License Board toll-free at 1-800-321-2752, or by visiting cslb.ca.gov.
- Ask for references.
- Get a written contract, and make sure it contains everything you’ve talked about in person. If it’s not in the contract, the contractor can’t be held accountable for making it happen.
- Don’t pay in cash, and never pay for the entire project before the work is completed.
TO MAKE SURE YOUR NOT A VICTIM OR PERPETRATOR OR PRICE GOUGING:
- Price gouging laws prohibit raising rental housing costs by more than 10 percent following the declaration of a state of emergency. Please note that price gouging is a complicated issue — for more details, visit the California Attorney General’s website at oag.ca.gov/consumers/pricegougingduringdisasters.
- You can check to see if a declaration of emergency is in effect by visiting gov.ca.gov.
- If you feel you’re experiencing price gouging following a wildfire, you can file a complaint with the Attorney General’s office by calling 1-800-952-5225. You can also get a referral for a lawyer by contacting the State Bar at 866-442-2529 or visiting calbar.ca.gov.
Sources: “Don’t Get Burned After a Disaster.” California Department of Insurance. January 2019. “Beware of Post-Wildfire Scams.” Federal Emergency Management Agency. December 14, 2018. “FAQs on Price Gouging.” State of California Department of Justice.