Southern Californians facing losses from this week’s wildfires in the Los Angeles area are starting to face their next challenge: filing an insurance claim.
Although mainstream insurers grabbed headlines last year for refusing to write any new policies in the state amid rising fire threats, they still hold onto tens of thousands of pre-existing customers who may have been affected.
And while public claims adjusters — who are privately hired by consumers seeking to avoid insurance company adjusters — are warning that it can take years for claims to be resolved, California residents enjoy some benefits not seen elsewhere.
The main benefit is that all property insurers in California must immediately pay at least one-third of the estimated value of a policyholder’s personal effects, as well as a minimum of four months’ rent for the local area in which they live.
However, insurance industry experts are warning homeowners to expect to negotiate between the carrier, claims adjuster and contractors for loss reimbursement and rebuilding — and that the final payout for a home that is damaged or totaled may be less. than what policyholders thought they were getting.
“Think of it as a business transaction,” said Amy Bach, executive director of United Policyholders, a group that advocates on behalf of consumers. “Give your insurance company a chance to do the right thing, but don’t be pushy and keep your eyes open. No one is going to come in with a magic wand.”
The first steps
Most insurance companies now allow policyholders to submit claims online or even through mobile apps.
However, they differ in the amount of documentation required. Experts say the documentation process will be key to recovering losses — and that many companies have become aggressive in determining what is ultimately covered.
To ensure the maximum payment, experts recommend taking detailed videos and photos of the damage sustained, as well as compiling receipts for lost or damaged items, as well as for purchases made during the relocation of a policy holder. Do not throw anything away until the insurer has signed off on doing so.
“It’s important to be very thorough and consider everything,” said Janet Ruiz, director of strategic communications for the Insurance Information Institute, which represents the insurance industry.
Resolving loss claims may also require rebuilding the appearance of a home before it was damaged or destroyed. Thus, experts also recommend creating a photo album containing interior and exterior images of a home.
Policyholders should also take detailed notes of any and all conversations they have during the process – names, dates and phone numbers.
Getting paid
While California movers offer cash advances to cover temporary relocations, the payment amounts are often on the depreciated value of the items, Ruiz said.
As for payouts for the damaged or totaled homes themselves, some long-term policyholders may find that while the value of their home has increased recently, they haven’t paid for the equivalent amount of insurance.
Thus, rebuilding their home at or beyond its pre-disaster market value can be difficult.
On the other hand, some select policies contain what are known as “extended replacement cost” clauses, which allow policyholders to offset the market cost of rebuilding a home.
However, insurers have become aggressive in denying certain claims, particularly for partial damage in which smoke, ash and carbon may have been contributing factors, Bach said.
All affected residents must also apply for assistance from the Federal Emergency Management Agency and the Small Business Administration, although many will not qualify because they exceed income thresholds, Bach said.
If you didn’t have insurance
If an individual has recently purchased a new home with cash, had a policy dropped, or simply cannot afford insurance, there are still options available.
FEMA has already begun offering temporary assistance options and the Small Business Administration is now accepting homeowner loan applications; contrary to its name, the SBA also provides assistance to individuals who did not have businesses.
