California Burning: After Wildfire Battles, Insurance Hurdles

by The MoneyGeek Team
October 11, 2017
2016 wildfire. Learn how to prepare for one at (FEMA: Jana Baldwin)

Like many people living close to the wildfires in northern California, the MoneyGeek team has family and friends affected by the disaster. One colleague’s parents were evacuated at 4 a.m. to sounds of a massive explosion a mile away; other family members are in emergency shelters or staying with relatives. Some friends who had gone to the wine country for a weekend get-away found themselves fleeing back to the Bay Area with fires on both sides of the road. Overnight, bucolic ranches, forests and entire neighborhoods have burned to rubble, with tens of thousands of dazed evacuees housed in makeshift shelters or with friends and family. We are updating the death toll and property destruction statistics daily.

California is staggering under the weight of horrific wildfires, which as of October 17 have burned down more than 245,000 acres throughout the state.

The federal government has declared northern California a disaster area. At least 40 people have been killed, hundreds are still missing, and more than 5,700 homes and businesses have burned, with entire neighborhoods destroyed in Santa Rosa and other areas, according to news reports. An estimated 34,000 people are still evacuated and new fires are still breaking out, including one in the Boulder Creek area of the Santa Cruz mountains, according to news reports.

Wine country homes underinsured

The state’s wine country has been particularly hard hit. Due to bone-dry vegetation and high winds, the fires are raging unpredictably and firefighters are now struggling with blazes in Napa, Sonoma, Lake, Mendocino, Yuba, Nevada, Calaveras and Butte counties.

And for California residents whose homes are now charred metal and brick, with sometimes only the mailbox or fireplace left standing, the process of rebuilding will be grueling.

According to an article in the New York Times, insurance groups estimate that many home insurance policyholders in California have 20 percent less insurance than they should. This means that to rebuild a $600,000 home, homeowners would have to pony up $120,000 to restore it to its former state.

Consumer and insurance groups place the blame for this insurance gap in different corners. The consumer advocacy group United Policyholders charges that home insurance formulas sometimes fail to cover the full cost of rebuilding, while the Insurance Information Institute warns that policyholders often forget to report new home additions to their insurance carrier.

“That changes it dramatically,” Janet Ruiz, a California representative for the III, told the Times. “If you don’t let the insurance company know, then they’re not aware.”

Here are some tips from the Red Cross, insurers and other agencies for dealing with the crisis, insurance and recovery:

Prepare to evacuate
If fires are still burning in your area, assume that you may be evacuated. If you don’t already have an emergency kit with a three-day supply of food and water, assemble one as quickly as you can.

Add a manual can opener, a flashlight, cell phones and chargers, extra batteries, emergency blankets, extra cash and a battery-powered weather radio if you have one. Also include copies of your passport and other key personal documents, medical supplies, pet food, a first aid kit, personal hygiene items, extra keys, plus baby supplies and kids’ games, the Red Cross advises. If you have a fire-proof safe designed to preserve photos and documents, store the rest there.

You can find the nearest shelter on the map at or the Red Cross’s free Emergency App. If you have pets, ask the shelter if they can waive the no-pet policy or look for the nearest animal emergency shelter. You can also post on the Red Cross’s Safe and Well tool to let loved ones know you are safe.

Lend a hand
If you live in a part of northern California not affected by the fire, your first impulse, understandably, may be to rush food and clothes to nearby emergency shelters. Check first, though, since officials in some areas are asking people to donate money instead to groups leading the rescue efforts, including the American Red Cross and the Napa Valley Community Disaster Relief Fund.

The American Red Cross is looking for more volunteers to assist evacuees; Napa Valley Community Animal Rescue Team is calling for help evacuating animals (especially people who have equipment for transporting horses); and the Center for Volunteer and Nonprofit Leadership needs help assisting fire victims and raising funds for recovery.

Some families have also set up GoFundMe pages for help rebuilding homes destroyed by the fire, and Airbnb is asking residents who use the short-term rental platform to consider offering free housing to fire victims and rescue workers until October 30.

Connect with your insurance carrier
Mobile units from the largest insurance companies, such as State Farm, Allstate and the USAA, are already in Santa Rosa, Calif., to help fire victims through the process of recovery, according to Ruiz.

Remember that standard homeowner policies cover “additional living expenses” (ALE), such as hotels, while you are displaced or living away from your home while it is rebuilt, but you should ask your insurance carrier about the time limits on that provision. Also, consider hiring a public (independent) adjuster to help negotiate your claim with the insurance company, as it can be a highly complicated process.

Take a home inventory
If you’re still safely in your home, be aware that home insurance covers your personal belongings as well as the house itself. Do a home inventory so you’ll be prepared in case the wind changes, perhaps using a video camera or cell phone to take pictures of each room and the belongings in it. Take a photo of serial numbers and other identifying information, too.

Wrote one homeowner after a disastrous home fire in 2011: “One of the absolute worst projects after the fire was trying to create our contents list from memory of 1400 square feet plus a garage with who knows what in it…Besides an [escape] plan, a home inventory is one of the best thing you can do before a disaster.”

Of course, some things cannot be replaced. A homeowner in the Coffey Park suburb of Santa Rosa who lost his home and all his family photos told reporters, “You feel like you lost a part of your life.”

The MoneyGeek editorial team has decades of combined experience in writing and publishing information about how people should manage money, insurance and mortgages. Our editors have worked with numerous publications, including The Washington Post, The Daily Business Review, HealthDay, and Time Inc., and have won numerous journalism awards.

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