Continuing last week’s post, in addition to concerns by homeowners that the carriers aren’t paying the full damages in Fourmile fire claims, additional concerns are being raised about the coverage purchased from various carriers. The silent problem of “Underinsurance” seems to be hurting those in the Fourmile area.

Jefferson Dodge at BoulderWeekly discussed this problem in his article, Burned again- Fourmile Fire Victim Report Problems Getting Insurance Money. Dodge explained, “many Fourmile victims were unaware they were ‘under-insured.’ either because they hadn’t updated their policy in decades or were sold less insurance than they actually needed.” Lewis Perkins serves as one example. Perkins lost his home in the fire but doesn’t have enough coverage to rebuild the home he once had. At the time of the loss, the assessed value of his home was $210,000.00 but Perkins only received $91,000.00 for the structure damages. Perkins explained that he relied on his insurance company for proper coverage, after being insured with Nationwide for 26 years, Perkins thought he was covered: “I thought if you bought insurance, it would take care of things.” Another Colorado resident ran into a similar problem, but Nana Will thought she had performed her due diligence as an informed consumer when she checked on her coverage amounts after upgrading her home. In January 2010, after Will added solar panels to her home she notified Safeco. Safeco advised that so long as the system did not exceed $50,000.00 the coverage she had in place was appropriate. The solar system was less, but Will states the coverage she had in place during the September fire was inadequate; Safeco has issued payment far less than the amount needed for reconstruction.

As mentioned in Part I of this post, public adjuster Scott deLuise and others are attempting to help the policyholders who have suffered as a result of this fire.

One way public adjusters can help in times of catastrophe, as demonstrated by deLuise, is by reaching out to United Policyholders (UP).

Karen Reimus, of UP, explained that in cases of natural disaster underinsurance is the number one problem facing families who have lost their homes. Before a loss, UP suggests homeowners examine their policies closely and provides a practical math equation to see if more coverage should be purchased. Evaluate the structure limit on the home and compare this figure to the cost per-square-foot needed to rebuild a new home in your specific area. If this coverage is too low, higher limits need to be purchased for structure coverage and most likely for each coverages provided under the policy. UP’s website provides other practical tips for policyholders that can help before a loss happens.

  • Make a personal property inventory
  • Take pictures of your belongings
  • Keep a record of your items and important papers somewhere safe (besides inside your home)

The recommendations Reimus makes are sound. She came to learn about issues with her own insurance company first-hand when she lost her home in a 2003 California fire. Reimus’ home had been purchased just four months before the loss. At the time the policy was issued, Reimus asked her agent questions about the amount of coverage but she was still a victim of underinsurance. Reimus states that carriers underinsure homes intentionally to minimize their exposure and protect their market share by making premiums competitive. The problems show up for the policyholders in cases of disaster and total loss scenarios.

To help local fire victims in Colorado with this problem and others, Karen Reimus is holding a monthly series of workshops. To learn more practical tips or additional information about the situation in Colorado visit www.unitedpolicyholders/