Last week, Chip Merlin commented on the emotional impact of catastrophes, especially when insurers fail to deliver benefits or treat their policyholders unfairly. Indeed, policyholders facing great losses turn to their insurers in their greatest time of need and expect that the insurers deliver. Unfortunately, as we have seen before, insurers do not always come through for their insured. This seems to be the story shared by many victims of the devastating Colorado wildfires earlier this summer. Recently, wildfire victims met with the Colorado Insurance Commissioner and various lawmakers to share the problems and difficulties they are experiencing with their insurance companies. There were complaints about one particular insurance company (at this moment unidentified) that was low-balling claimants it considered desperate enough to accept unfair offers.

One homeowner summed up the sentiments of many:

When something happens, insurers should pay you the full extent of the policy. But they find every way they can to beat you down. We’re paying for something that we’re not getting.

Most complaints involve depreciated settlement offers insufficient to cover rebuilding costs and difficulty getting reimbursement for home contents destroyed by the fires. In many cases, homeowners were offered settlement amounts based a percentage of replacement costs, with the full value of the policy due only after the structure is rebuilt. This worsens the situation for those who lack the financial resources needed to fully rebuild. At the present, Colorado is one of 19 states that do not have a valued policy laws. While homeowners are pushing for such laws that would mandate the insurer, in the event of a total loss, pay the full value of the policy upfront, it remains to be seen whether there is enough impetus for legislative action. Serious efforts for reform will require policyholders to make their voices heard.