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Emergency Preparedness 2018
Sponsored by Montecito Bank & Trust and Cottage Health

Emergency Preparedness: Knowing What Insurance Policies Cover Important Following Natural Disaster

Residents urged to file claims, even if they think they may not be covered for the losses from fire or floods

Many Montecito residents have structures that were damaged or destroyed last month due to flooding and mud and debris flows. Insurance industry professionals say it is important to know what is covered and what is not covered in homeowner’s and renter’s insurance policies. Click to view larger
Many Montecito residents have structures that were damaged or destroyed last month due to flooding and mud and debris flows. Insurance industry professionals say it is important to know what is covered and what is not covered in homeowner’s and renter’s insurance policies. (Urban Hikers / Noozhawk photo)

In the wake of the Thomas Fire and deadly Jan. 9 storm that caused widespread destruction in Montecito, insurance industry professionals say it is important to know what is covered and what is not covered in homeowner’s and renter’s insurance policies.

Insurance policies vary, with standard policies only covering loss due to specific perils, such as fire, wind, water leaks, etc. Policies specifically exclude losses incurred by earthquakes, landslides and mudflow.

“In rare instances, some homeowners policy can be endorsed to cover flood at an additional premium,” said Darren Caesar, HUB International Insurance Services, Santa Barbara, senior vice president. “Typically, you would buy a separate flood policy and possibly an excess flood policy for higher flood limits.” 

There is also a 30-day waiting period for flood coverage after a policy is purchased, and both earthquake and flood insurance coverage is fairly expensive, with policies averaging $1,000 and more annually, according to industry experts.

Homeowner’s insurance is meant to provide money to replace a residence damaged in a natural disaster to the way the structure was prior to being damaged, said Janet Ruiz, California spokeswoman for the Insurance Information Institute

“It sounds really simple but people struggle with that,” Ruiz said. “It’s very traumatic to lose everything.”

Renter’s insurance, which isn’t expensive and costs about $200 to $300 a year, covers the personal property, loss of use and liability of the tenant. Policies cover belongings, not structure damage.

“It’s really worth getting because it can help you get into a new place,” Ruiz said about renter’s insurance, noting that landlords have no liability for a tenant’s personal belongings.

Josh Stichter, vice president of HUB International Insurance Services in Santa Barbara, said an insurance policy serves as a legal document, and following natural disasters, such as the deadly mudslides in Montecito, neighbors talk with one another about their coverage, which can spread misinformation.

“We are reminding our clients to stay focused on what (their) policy says … which can be tough in these situations,” Stichter said.

He noted that the biggest expense for many people following a natural disaster where they are displaced from their homes is the additional living expenses they will incur.

Stichter and other industry experts recommend keeping receipts of all expenses related to evacuation and relocation for future claims. It doesn’t guarantee an individual will be compensated by insurers, but documentation is needed for filing claims.

Both Ruiz and Stichter also recommend that people with insurance who suffered damages in the Thomas Fire and/or the mudslides have their agents or brokers file a claim on their behalf, even if they think they may not be covered for the losses.

Insurance claims must be filed within 24 months of a natural disaster to be considered.

Most Montecito residents didn’t have optional flood insurance, but damage could be covered under fire insurance policies if it is determined that the Thomas Fire caused the flooding and mudslides, according to California Insurance Commissioner Dave Jones.

“There may be exceptions (to coverage) in the Montecito disaster,” Ruiz said, adding that the Jan. 9 event was unprecedented. “Every claim will be reviewed for its own merit. It’s going to be case by case, but you have to turn a claim in.”

Sen. Hannah-Beth Jackson (D-Santa Barbara) recently introduced a bill to ensure fire insurance policies cover losses incurred from fire-induced mudslides. As a general rule, such losses aren’t covered.

Senate Bill 917 clarifies that, under current law, an insurance policy covers loss or damage resulting from a landslide if that landslide was attributable to a condition already covered by the policy, such as wildfires.

The Montecito mudslides and debris flows that damaged and destroyed more than 400 homes happened after significant rains fell on the watershed burned by the Thomas Fire, the largest wildfire in modern California history. 

“My bill makes it clear that current law requires coverage of these fire-caused events,” Jackson said. “For many Californians, their home is their nest egg, and the result of a lifetime of hard work. This is a question of justice and fairness for these residents, many of them retirees, and any Californians who find themselves in similar situations.”

People who suffered damage and were uninsured or underinsured can apply for FEMA disaster assistance or low-interest Small Business Administration loans. 

The maximum grant amount through FEMA is $34,000, which will not be enough to rebuild a home or replace all belongings, but applying can let FEMA and other agencies know where someone is in terms of unmet needs. 

Disaster unemployment assistance, disaster legal services and some funeral expenses can also be covered by FEMA assistance. 

Santa Barbara County has a Disaster Recovery Center at Calvary Chapel Church in Santa Barbara for people to get information about disaster assistance programs, with representatives from FEMA, the SBA, the Employment Development Department, the State Supplemental Grant Program and others. 

It is located at 1 N. Cesar Chavez and is open from 9 a.m. to 6 p.m. on Monday, Tuesday, Thursday and Friday, and 9 a.m. to 3 p.m. on Wednesday and Saturday. 

Noozhawk contributing writer April Charlton can be reached at [email protected]. Follow Noozhawk on Twitter: @noozhawk, @NoozhawkSociety, @NoozhawkNews and @NoozhawkBiz. Become a fan of Noozhawk on Facebook.

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