My colleague Denise Sze recently blogged about the Butte and Valley wildfires. More than 5,000 homes were damaged or destroyed. Indeed, many residents face a painful road to recovery.
Last week, to increase the speed of the recovery process for wildfire victims, California Insurance Commissioner Jones obtained agreements from several insurance companies to adopt various claims handling reforms.
Recognizing that many homeowners will have great difficulty reconstructing destroyed or missing documents, the Commissioner asked insurers to, among other things, ease up on requests for documentation they normally require prior to the release of payments.1 According to the Commissioner "Expediting the insurance claim process is the right thing to do." Why reforms expediting the claim process cannot be implemented in all fire (or other) claims and not just wildfire claims is a topic for another day. Here are some of the claims handling reforms that relate to property losses:2
Additional Living Expenses (ALE): Insurers should adopt a standard ALE advance payment of 4 months for a total loss upon request.
Personal Property (Contents): Insurers should provide a standard contents advance payment of at least 25% of policy limits for a total loss of the primary residence in a wildfire disaster.
Billing: All insurers should grant billing leniency for at least 30 days for customers in designated wildfire disaster areas.
Inventory Forms: Insurers should agree to accept home inventory software (or paper alternative) without a requirement of using company-specific inventory forms.
Inventory Itemization: Insurers should agree to accept reduced itemization of contents in wildfire total losses.
The above reforms, albeit voluntary, certainly will help a great number; hopefully the insurers who do participate, abide by the reforms.
Policyholders unsure if their insurer is participating in the voluntary policy forms can call Consumer Services at (800) 927-4357.
1 California Department of Insurance, October 14, 2015 Press Release.
2 California Department of Insurance, "Voluntary Claims Handling Reforms for Wildfires"