Live in California? Get lots of insurance says leading expert

An expert says that Californians should be more careful about purchasing insurance for their homes, as there is no guarantee that their policies can completely pay for claims such as severe wildfire damage.

In an opinion piece in the Los Angeles Times, California Western School of Law professor Kenneth S. Klein discussed the reasons why so many Californians lacked adequate insurance following the latest strings of wildfire incidents across the state.

“Insurance industry data reveals that for a score of reasons — inflation of the cost of work and supplies after a mass disaster, the rising cost of home construction, the difference between the cost of construction and the cost of buying an existing home — at least 80% of the homes in the United States have less than 80% of the coverage required to completely rebuild after a fire,” Klein wrote.

“Almost everyone assumes they have enough insurance, but evidently they don’t.”

Klein pointed out that the Californian insurance inadequacy could be traced back to a clause hidden in most policies that says that the homeowner is the expert on the value of his or her home. Under this clause, this means that if the amount of insurance purchased for a home is not enough, it falls on the homeowner to pick up the difference.

Unfortunately for Californian homeowners, that clause is often enforced by state courts.

“You may say, ‘My insurance provides 125% coverage of my home value, so I am comfortable that I have enough insurance.’ Don’t take comfort in that policy,” Klein explained.

“The percentage is pegged to the value of the home at the time of purchase, meaning it can sound like a lot more than it is in reality. Real estate values rise — sometimes quickly — and building costs rise after large-scale disasters due to simple supply-and-demand economics.”

Klein believes that the state should change its fire insurance regulation laws to allow for full home replacements, but noted that such an overhaul would take years to go through red tape.

Until state insurance rules can be fixed, Klein suggested that homeowners should purchase insurance for their properties with enough coverage to pay for a full reconstruction.

“Before you purchase or renew a home insurance policy, send an email to the insurance broker/agent that says: ‘I want enough insurance that if my home burns down in a wildfire, I have enough coverage to rebuild my home. Please tell me what amount of coverage I should have, and quote me the rate for that amount of coverage. Please respond by email rather than by telephone or in person. Thank you.’”

“When the broker/agent responds to that email, purchase the amount quoted immediately,” he added. “Keep a record of the correspondence somewhere other than in your house — even documents in a fire safe are not “safe” in a fire. Repeat this exercise every single time that you renew your homeowner’s insurance.”

Article by; Insurance Business America.

Aftermath of the Fires in our Communities

Team Insurance & Financial Services, Inc. has 4 owners with a combined 100 years of insurance experience. And a sales staff with a combined 19 years’ experience. Our service staff with combined years of experience of 25 years. We have a total of 144 years to assist you in your claims and insurance needs.

We have compiled a list of things to remember while we go through this rebuild process together.

  • Please remember when you are dealing with insurance companies in the claims process they are required to follow state law.

  • If you do not understand what the claims representative is telling you, reach out to our staff, and we can guide you in the claims process.

  • We are reminding all our clients to continue to pay your homeowners insurance premiums and be sure your current home policy remains in force during the rebuild process.

  • If you acquire temporary housing during your rebuild, your current insurance will extend to a rented home or an apartment with liability and personal property coverage. Also, your new home will be covered during the course of construction process. Your liability will remain in place during this process as well. You will not need to obtain any other policy during your rebuilding process.

  • If you are going to do “owner/builder” please make sure you discuss your options with your insurance company. All insurance companies offer workers compensation coverage on a homeowners policy but this is limited coverage and refers to your policy wording as in-servants and out-servants only. We are recommending that our customers obtain a workers compensation policy from State Fund during the rebuild process. We, at Team Insurance, can help you in acquiring such coverage. Again, have the discussion with insurance company first.

  • With all of the home losses, there will be many out of the area contractors offering their services. We are recommending that you do not give any money or sign any contracts until you do your homework. Get a copy of the driver’s license, social security number and contractor’s license number. With this information you can run a background check to verify who they are. Also request a copy of their insurance policies to verify coverage. Workers compensation, general liability and business auto policies should all be covered and a certificate of insurance should be obtained before your rebuild begins. Call the insurance agency to make sure their policies are in good standing and if they would offer a recommendation on their behalf.

  • Most importantly, stay in touch with your agency! They can help you in this process. If you are not one of our clients, we can help you understand your policy at no cost to you.

White House wants $5 billion to ease fiscal crisis

The White House on Tuesday asked Congress for $5 billion to ease a fiscal crisis striking the government of Puerto Rico in the wake of Hurricane Maria.

Puerto Rico’s central government and various municipalities and other local governments are suffering unsustainable cash shortfalls as Maria has choked off revenues and strained resources. The administration’s request, so far delivered informally, would provide $4.9 billion for Puerto Rico and its local jurisdictions. Celebrate excellence in insurance. Join us at the Insurance Business Awards in Chicago.

The White House also requested $150 million to help Puerto Rico with the 10% match required for Federal Emergency Management Agency disaster relief.

A senior administration official confirmed the request, requiring anonymity because it is not yet official. The official stressed that jurisdictions other than Puerto Rico are eligible, but acknowledged the cash-strapped territory is sure to receive the bulk of the money.

On Saturday, Puerto Rico Gov. Ricardo Rossello sent a letter to lawmakers asking for $500 million for the community disaster loan program, which is designed to help local governments deal with tax revenue shortfalls caused by disasters. He requested almost $4 billion in other aid. Learn more about flood insurance at the Future of Flood event being held in Miami, Florida on November 16. Click here for more details and to register.

“In addition to the immediate humanitarian crisis, Puerto Rico is on the brink of a massive liquidity crisis that will intensify in the immediate future,” Rossello wrote.

Hours after the request, the House Appropriations Committee unveiled a $36.5 billion emergency spending bill that merged Tuesday’s request with a proposal that the White House sent to Capitol Hill last week to replenish disaster funds and ease a cash crunch in the federal flood insurance program. A Thursday vote is expected.

“These funds are urgently needed to get resources to families and communities that are still suffering. This legislation will continue immediate relief efforts, and help jump-start the rebuilding process,” said Appropriations Committee Chairman Rodney Frelinghuysen, R-N.J.

Puerto Rico was already suffering from a lengthy recession and its government was beset with fiscal struggles to begin with. A financial control board is overseeing its debt problems and austerity plans.

The administration asked for $29 billion last week for FEMA disaster relief efforts and to pay federal flood insurance claims. House Majority Leader Kevin McCarthy said a vote is likely this week. The White House also requested $577 million to replenish federal firefighting accounts depleted by this year’s bad spate of western wildfires.

The leadership-backed House aid bill ignores requests made last week by the Texas and Florida delegations last week for tens of billions of dollars in additional assistance. Texas requested $19 billion in Harvey relief, while Florida asked for $27 billion for Hurricane Irma damage. House Democratic leader Nancy Pelosi, D-Calif., issued a statement Tuesday that said funding is also needed to help California recover from ongoing wildfires.

But GOP leaders want to avoid costly add-ons that could slow the package, though the Senate could add funding to the measure as it did when advancing a $15 billion aid package last month.
Congress last month approved a $15 billion first instalment for disaster relief. Final estimates for the massive relief and rebuilding effort won’t be ready for a while, but a huge year-end relief and reconstruction measure is expected.

Associated Press