California Commissioner Wants Insurers to Extend Living Expense Coverage for 2017 Wildfire Survivors

May 29, 2019

California Insurance Commissioner Ricardo Lara on Wednesday announced two new actions intended to assist survivors of the 2017 North Bay Fires who are facing unavoidable delays in rebuilding.

The California Department of Insurance issued a notice to insurers requesting they extend additional living expense coverage by a full year to survivors whose additional living expense benefits will expire within months. ALE coverage typically includes food and housing costs, furniture rental, relocation and storage, and extra transportation expenses while a home is uninhabitable.

The CDI issued a second notice requesting that insurers not deduct the land value when survivors who suffered a total loss choose to purchase a new home in a different location.

New state laws extended living expense coverage from 24 to 36 months, but did not apply to survivors of the October 2017 fires that destroyed 5,300 homes and caused more than $12 billion in losses across five counties.

“With labor shortages and other outside factors delaying the rebuilding process, time is running out for many who lost their homes in the 2017 fires,” Lara said in a statement. “I urge insurers to show good faith with their policyholders by extending living expense payments to those who have endured so many delays beyond their control.”

According to local officials, Sonoma County and the City of Santa Rosa have processed 2,814 permits for homes, representing 55 percent of the 5,143 homes destroyed in the fires. To date, 399 homes have been finished.

The deduction of the land value from the cost of purchasing a home at a new location creates another complication for some survivors.

California law allows those who suffer a total loss to utilize insurance to rebuild in the original location, rebuild in a new location, or to relocate to a replacement home. The CDI has received complaints from policyholders who chose to relocate that their insurer deducted the estimated land value of the new home from the overall replacement cost payment, leaving policyholders with less than the full amount of their benefits they would have been due if they rebuilt the home.

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