Fire News

Insurance Update

The SRCA was successful in having about 500 people at a barbecue and meeting with Insurance Commissioner John Garamendi at Marshall Middle School in late April. He heard our complaints, and that meeting led to a group of fire survivors going to Sacramento to educate legislators as to what happens to homeowners after a catastrophic loss.

The group of nine (shown on the front cover, L to R: Erik Strahm, Scripps Ranch; Rebecca Huston, Lake Arrowhead; Don Robinson, Scripps Ranch; Heidi Koin, San Bernardino; Susan Smith, Scripps Ranch; Karen Reimus, Scripps Ranch; Don Halte, Crest; Adam Richardson, Scripps Ranch; and, Bob Ilko, SRCA Project Phoenix) discussed changes to how insurance policies are sold and how claims are handled to prevent others in future losses from suffering the same ordeals. The educational visit was for the future protection of all insurance consumers in California.

In meeting with individual legislators and their staffs, the group talked about how if Department of Insurance Commissioner John Garamendi's Homeowners' Bill of Rights--five new legislative bills described below--had been in effect before October 2003, the handling of insurance claims would have been significantly better. The governor's office also met with the group and called the commissioner's office thanking them for the presentation that was an eye-opener as to the issues. The first four bills were drafted and up for votes from the two insurance committees. The fifth bill was drafted after the Sacramento visit.

Each of the bills passed out of its insurance committee by the following favorable votes: SB 1474, 5-2; SB 1855, 6-0; AB 2199, 17-0; and, AB 2962, 16-0. It became clear that insurance issues do not observe political boundaries when legislators say they too had similar expectations in purchasing insurance, and they too would be underinsured.

In the insurance committee hearings, illustrative testimony was given about how policies were purchased to cause underinsurance, how there was detrimental reliance on the insurer that the coverage was sufficient to cover losses, how terms describing the policies are misleading, how insurers are depreciating labor costs to lower payouts, how insurers are "blackballing" homeowners for making a single no-fault claim, and the need to extend the additional living expense period to accurately reflect the time it takes to rebuild. On the record, Senate Insurance Committee Chair Jackie Speier grilled insurance industry representative and asked how is it not a misrepresentation that a "replacement" policy does not actually replace items.

Commissioner John Garamendi's Homeowners' Bill of Rights:

Senate Bill 1474 (authored by Martha Escutia, D-Norwalk): Requires an insurance company to issue and renew a homeowner's policy unless the consumer made two or more claims within the preceding three-year period.

Senate Bill 1855 (Dede Alpert, D-San Diego): Requires insurance companies to disclose the additional cost of broader insurance coverage than the homeowner's current coverage. The costs would represent the additional premium the consumer would be charged for the additional coverage, if the consumer opted for that coverage. When a consumer purchases a policy, and every two years thereafter, they are to be provided with a disclosure that defines the categories of coverage that may be purchased--i.e., Extended Replacement Cost, Actual Cash Value, etc.

Also amends the disclosure from "Extended Replacement Cost Coverage" to "Limited Replacement Cost Coverage with Additional Percentage Allowable" and "Replacement Cost Coverage" to "Limited Replacement Cost Coverage."

SB 1855 also requires insurers to include additional information about the insured property on the declaration page, such as the square footage of the structure, as well as a disclosure statement regarding the dollar amount per square foot to rebuild. The disclosure will also inform the consumer to seek additional information if he or she does not believe the limit of liability is sufficient.

Assembly Bill 2199 (Christine Kehoe, D-San Diego): This bill establishes a minimum 12-month period in non-catastrophic situations--with additional six-month extensions if the policyholder can show good cause--and a 24-month period for declared "state of emergency" situations for homeowners to repair, rebuild, or replace their home after a loss, commencing with payment of actual cash value.

Assembly Bill 2962 (Fran Pavley, D-Coastal LA): Establishes a uniform measurement of "actual cash value" and prohibits the depreciation of labor costs from homeowner claims unless it is fully disclosed in the disclosure and policy. Many homeowner policies do not clearly define how "actual cash value" will be determined leading to protracted conflicts between homeowners and insurers.

In addition, when calculating the actual cash value, most insurance companies deduct some of the cost of the labor to replace or repair what has been lost. This results in the consumer paying out-of-pocket costs.

AB 2962 also ensures that insurers do not depreciate items that, by their nature, do not depreciate or wear out. Such items might include two-by-four studs, drywall, cement posts, and other components. However, an insurer may apply depreciation to items that do wear out like roofing materials, carpeting, etc.

Senate Bill 64 (Jackie Speier, D-San Francisco/San Mateo) Fire Survivor Claims Mediation: This proposed legislation would give the Department of Insurance authority to sponsor a mediation program to expedite the resolution of conflicts between wildfire survivors and their insurance carriers relating to issues such as coverage, scope of loss, and claims settlement.

The program would be roughly patterned after the one established by the legislature after the 1993 Northridge earthquake. Mediators would be selected from a list of qualified applicants established by the department but paid for by the insurer. The program is voluntary, either party may accept or reject any agreement, and consumers would have three days to rescind any agreement. This type of program would help those who are underinsured despite purchasing coverage at the policy limit suggested by the agent or insurer.

The four bills that passed through committee now go to the other legislative house committee. If the bills pass there, they go to the full legislature. The next votes will likely be in August. Each of the bills is subject to being amended. We will keep you updated. To find out more about the bills, visit [].

Bob Ilko, Project Phoenix Chair

Generous Donations

Pardee Homes donated $20,000 to the SRCA Fire Relief Fund. Scripps Ranch will benefit from the donation made by Pardee Homes and the Weyerhaeuser Company Foundation through the efforts of Councilmember Brian Maienschein. Pardee is a member of the Weyerhaeuser Company family. The $20,000 donation will be used to help in the rebuilding process. Thank you, Pardee Homes and the Weyerhaeuser Company Foundation!

Susan Couch, senior client manager with Bank of America's small business banking group, announced a $10,000 donation to the San Diego Fire-Rescue Department's helicopter program at the Scripps Ranch Civic Association meeting in May. Councilmember Brian Maienschein acknowledged the donation on behalf of the Fire-Rescue Department. Thank you, Bank of America!


Thank You's

Thank you to Sun Diego Charter Company and Cloud 9 for providing buses for fire-affected residents. Ramona residents were bused to Scripps Ranch to attend the meeting with Insurance Commissioner John Garamendi.

Groundbreaking News!

[Editor's note: Darlene Bourdon and her family lost their home on La Colina Road. They have been kind enough to share their story with us each month. This month, more good news!]

We have broken ground! In the first week since the plans were approved, teams of workers have converged onto the property. Backhoe drivers turned the chalk lines into trenches. The trenches were framed with lumber. The plumbers arrived and lined the trenches with pipes. Then came the steel reinforcement bars.

On the day of this writing, workers poured the cement from ten trucks and formed the foundation of our home. We are going to celebrate the event. We even memorialized the day by etching our names and the date into the cement.

It is difficult to express how emotionally uplifting it is to watch these first steps. For the first time since this calamity, there is a true sense that we are on our way home. It's not just our home either. The whole neighborhood seems to be in a wonderful building frenzy. Almost every lot is at some stage of construction.

With each day we see more of our neighbors as they visit their sites. In what has become a sort of pilgrimage to progress, we share with each other the excitement of each step of the rebuilding process. It's funny how perspectives change. The many workers, cacophony of construction noises, and the endless variety of normally annoying vehicles have all combined to make for great theater we would pay to watch. Come to think of it, we are paying for the show.

Maybe we've become too susceptible to superficial emotional triggers. Perhaps it's just knowing the worst of this odyssey is over. Or it might be that we are just looking for an excuse to celebrate. Whatever the reason, that is exactly what we are going to do today. It is, after all, Foundation Day.

Darlene Bourdon