Insurance industry 2, wildfire survivors 0
News: 2018 Press Release
Wildfire season already has California ablaze, as multiple wildfires burn throughout the state including the Pawnee Fire, which in four days has already destroyed 22 homes and 13,500 acres. Sadly, this appears to be only the beginning.
"Unfortunately, the insurance industry has chosen yet again to prioritize its insatiable appetite for profit over its own policyholders' who have and continue to suffer after losing everything in the devastating wildfires," said Commissioner Jones. "This common-sense proposal is the last resort for many wildfire survivors. It's a shame that the insurance industry, supposedly responsible for protecting California consumers, has chosen to neglect these survivors and significantly thwart the ability of many to rebuild and recover."
Despite the desperate need of many wildfire survivors to recover and rebuild, insurers pushed to inject into SB 894 a provision that takes a weakened version of a bill by Senator Mike McGuire that insurers previously killed last month. The language forced into SB 894 would be far weaker than current practice to help survivors avoid a dreaded inventory of all their possessions. Many survivors have described this process as a PTSD-like experience which adds insult to injury.
SB 894 is aimed at helping claimants avoid the huge financial burden of being underinsured by tens of thousands or hundreds of thousands of dollars and unable to afford to rebuild. Underinsurance is not only a financial blow to disaster survivors, it is economically devastating to communities because, as one of the most challenging obstacles to loss recovery, it delays claim settlements which delays rebuilding. Insurers have failed to address this significant issue through any efforts of their own.
The bill still provides survivors the option to combine various coverages within their homeowner policy to help offset some of the underinsured amount in their primary dwelling, but only in a limited fashion after narrowing at the hands of the insurance industry. Consumers only qualify for this provision if they meet three tests: 1) It is following a declared disaster; 2) They suffer a total loss; 3) They are underinsured in their primary dwelling or Coverage A.
SB 894 would have also extended policy renewal protections for survivors retroactively to July 1, 2017 to alleviate the burden on survivors who find it impossible to get new coverage during the planning and rebuilding phase of the recovery. However, the Assembly Insurance Committee insisted SB 894 not help 2017 or 2018 wildfire survivors and removed the retroactivity from this bill. This provision would still apply prospectively and reflects the reality that it takes most survivors more time than currently permitted to rebuild or replace the total loss property. Under the bill, survivors will be able to renew their insurance policy twice, which would cover two years after the loss.
The California Department of Insurance, established in 1868, is the largest consumer protection agency in California. Insurers collect $310 billion in premiums annually in California. Since 2011 the California Department of Insurance received more than 1,000,000 calls from consumers and helped recover over $469 million in claims and premiums. Please visit the Department of Insurance website at www.insurance.ca.gov. Non-media inquiries should be directed to the Consumer Hotline at 800-927-4357. Teletypewriter (TTY), please dial 800-482-4833.