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Insurance Woes Continue to Plague Victims of Tea, Jesusita Fires

State Insurance Commissioner Dave Jones holds a town-hall meeting in Santa Barbara to discuss homeowners' concerns

It’s been nearly three years since the Tea Fire raced through Montecito, sending the small community into chaos and displacing thousands. More than 210 homes were lost in the November 2008 fire, and many of those owners are still navigating the byzantine world of insurance coverage and negotiating how to pay for their homes as they rebuild. Those affected by the Jesusita Fire face similar dilemmas, with 80 homes lost in the San Roque foothills in May 2009.

On Thursday evening, State Insurance Commissioner Dave Jones met with victims about insurance issues related to the fires in a town-hall meeting in Santa Barbara.

Jones and his staff also met with officials from Santa Barbara, including county Supervisors Salud Carbajal and Janet Wolf, to tour the fire area.

The fires that occurred in Santa Barbara and San Diego were pivotal to insurance reform that Jones put forward earlier this year.

Much of Thursday’s discussion revolved around the FAIR plan, which was established by the Legislature to provide basic property insurance to those who can’t get it in the standard insurance market. Over and over, Jones argued that the FAIR policy was the “insurance plan of last resort” and that the coverage may not be enough to replace someone’s home.

Many people were drastically underinsured when they lost their homes. Because so many homes destroyed in the two Santa Barbara fires were covered by the FAIR plan, deficiencies were revealed that officials hadn’t seen before.

Many homeowners had purchased a “wrap-around policy” that would pick up where the FAIR policy left off, which they had hoped would cover the difference in the event of a fire. That wasn’t the case, and now, because of the reform, Jones said brokers are required to disclose the details of the policy, including replacement value, in a uniform fashion.

State Insurance Commissioner Dave Jones addresses fire victims during Thursday's meeting.
State Insurance Commissioner Dave Jones addresses fire victims during Thursday’s meeting. (Lara Cooper / Noozhawk photo)

The basic fire insurance didn’t cover additional living expenses and things such as building code upgrades.

Christine Harrison, who lost her home, had a FAIR plan with a wrap-around policy.

“If the fire had never happened, we would think we were covered,” she said, adding that people are shocked that fire survivors are still struggling with the process. “They’re shocked at the process that we have gone through in this room. It’s an issue of what’s being communicated by the brokers.”

Many of the homes destroyed had been built in the 1940s and ‘50s, and the costs of upgrading to new materials wasn’t included in their insurance.

Wendy Edmunds lost her home in the Tea Fire and experienced that dilemma firsthand.

“You don’t get to put old pipes back in in Santa Barbara,” she said.

“The market value of your home is not the replacement value of your home,” Jones said. “It’s absolutely critical that brokers are making that distinction understood but that consumers understand that as well.”

Deputy Commissioner Tony Cignarale offered some advice for the future. Knowing exactly what type of insurance a consumer has is crucial, Cigarelli said, and consumers must make sure they have enough insurance to fully cover their homes should it be destroyed, including building and displacement costs.

He said demand surge also must be accounted for. When a large swath of homes is destroyed, the price for local contractors will increase as demand goes up, so extended coverage must cover that.

Cignarale recommended that people do home inventories, and re-evaluate every year, using videotape to document their homes should they need to replace their homes and belongings.

Click here for more information, or call the insurance commissioner’s hot line at 1.800.927.4357.

Noozhawk staff writer Lara Cooper can be reached at .(JavaScript must be enabled to view this email address). Follow Noozhawk on Twitter: @noozhawk, @NoozhawkNews and @NoozhawkBiz. Connect with Noozhawk on Facebook.

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