Garamendi Warns Homeowners to Re-examine Fire Coverage

October 3, 2005

California Insurance Commissioner John Garamendi is urging homeowners to re-examine their insurance coverage, inventory home assets and make necessary preparations to protect their home and families before their lives are placed at great risk of financial catastrophe. Last year, far too many homeowners suffered enormous losses on property and home assets due to the devastating wildfires and by not being properly covered by their homeowners insurance.

“It is critical that you review your policies now to protect your homes and family,” said Garamendi.” Learn the lessons being taught by the brave survivors who discovered that in many cases their policies didn’t even cover the cost of rebuilding their homes let alone the loss of their home assets and family treasures.”

Garamendi urges homeowners to conduct a home inventory as soon as possible to make sure that their homes and possessions are properly covered. A complete household inventory list will provide a permanent record of the home’s contents and their value and should include a listing of serial numbers for electronic items which will help easily identify the items and give a good indication to the insured of whether or not current insurance coverage is adequate.

“It is essential that you document all of your possessions before disaster strikes,” said Garamendi. “Photograph or videotape household possessions, take an inventory describing each item in your home that you may have to replace and place a copy in a safe-deposit box. Also include important receipts and insurance documents that will help you support your insurance claims.”

The Department of Insurance has provided a sample property inventory list available on the Web site at The commissioner added that homeowners shouldn’t rely on their insurance companies to keep them informed of the need for additional coverage on their home or assets on a year to year basis, nor for complete information on how to best protect your assets.

The aftermath of the 2003 and 2004 wildfires resulted in the Department of Insurance’s consumer services bureau discovering multiple complaints by homeowner’s who lost their homes and assets in the devastating wildfires. The serious problems homeowners’ encountered after filing claims with insurers urged Garamendi to create The Homeowners’ Bill of Rights (HOBOR) – Wildfire Survivors Protection which passed the legislation in 2004, and as a result, give homeowners additional rights protecting their homes and property.

The HOBOR legislation gives homeowners the right to extend the time to rebuild or replace their homes after a declared state of emergency, allow homeowners to mediate disputed insurance claims, protect homeowners by insurers who are prohibited from canceling a policy between renewal periods while the home is being rebuilt and requires insurers to modify the disclosure from “Extended Replacement Cost Coverage” to “Limited Replacement Cost Coverage” as well as adding underinsurance disclosure on homeowner’s policies.

A report released Oct. 25, 2004, by the California Department of Insurance (CDI) indicated that many of the homeowners who suffered total losses in the 2003 Southern California wildfires complained that they were underinsured.

Of the 2,734 “total-loss” claims filed with insurers, 22 percent – or 676 – generated complaints regarding the handling of the claim by the insurer.

By comparison, CDI usually receives complaints from approximately one percent of all claims in most lines of insurance. Nearly half of the wildfire complaints – 316 of 676 – involved underinsurance.

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