March 30, 2013
Kerri Olivier, 54, considers herself lucky among her Mountain Shadows neighbors. Her house was still standing after the Waldo Canyon Fire roared through the community last June.
But nearing the deadline to file insurance claims, a year after the natural disaster, she fears she will run out of time or miss latent damages to her home she needs to report.
“The most urgent thing I think, right now, is the fact that we are running out of time,” Olivier said. “Most policies have at least some deadlines that are at the one-year anniversary.”
Olivier, who has lived in her home for 22 years, will be among a number of Waldo Canyon Fire victims testifying Tuesday at the state Capitol and urging lawmakers to extend insurance filing deadlines, prevent property from being underinsured and help simplify policies and the complicated claims process.
Rep. Claire Levy, D-Boulder, began advocating for property insurance reform in Colorado in 2010, after she talked to victims who lost their homes in the Fourmile Canyon Wildfire.
“They all started talking about the same problems they were having with their insurance, and the biggest problems were that they were underinsured and they had no idea that they were,” Levy said. “They thought that their insurance companies were helping them keep pace with construction costs.”
Levy introduced a bill in 2012 aimed at protecting homeowners but it died on a party-line vote in the House.
“This year I told the insurance companies I was going to try again, and unfortunately we had 300 some-odd homes lost in Larimer County and a similar amount lost in Colorado Springs,” Levy said. “The victims of those fires basically reported very similar problems.”
House Bill 1225 passed the House 58-6 last week with support from Republicans. It will be heard Tuesday in a Senate committee.
The bill is not without compromise.
“We feel like we’ve had a good ongoing dialogue and understanding the balance of addressing the real concerns of people, who have lost their homes in the fire … and the fact that homeowners insurance premiums are rising in Colorado already,” said Carole Walker, executive director of Rocky Mountain Insurance Information Association. “We really have to balance that with the impact of the marketplace … there has been a good understanding from legislators who are concerned about pricing people out of homeowners insurance.”
At one time, the bill required insurance companies to update their estimates for replacement cost every couple of years. That was taken out, Levy said.
But the law still would require insurance companies to offer homeowners the option of buying additional coverage for replacement costs — an extra 10 percent of the home’s value for changes in building codes and 20 percent of the value for other unexpected increases.
Levy said in a mass loss, the cost of construction goes up, and sometimes replacement cost estimates are just wrong. Offering homeowners additional coverage will help prevent conflicts like those of Waldo Canyon fire victims who found themselves underinsured.
Walker said the compromise requires insurers to inform homeowners of their options so they can make informed decisions about the coverage. Walker said not every homeowner is in a high-risk area or can afford extra coverage.
The bill also would allow homeowners to submit appraisals of their property for consideration in setting replacement costs.
Don Fymbo, a public adjuster who charges a 10-percenht contingency fee to assist homeowners with insurance claims, represents two clients from the Waldo Canyon fire. He says they were grossly underinsured by their insurance companies.
“If you don’t accurately set the replacement cost, everything goes to hell,” Fymbo said.
Other coverage amounts – including contents of a home – are often calculated as a percentage of the replacement cost.
Homeowners have a choice between less expensive policies that cover the cash value of a home or paying more for actual replacement costs. Fymbo said the vast majority of policies are actual replacement costs.
But in the case of one of his clients, Fymbo said the replacement cost estimate was so far off because no one from the insurance company ever inspected the property and based the estimate off of online property records.
Fymbo said he would like to see an amendment to Levy’s bill requiring insurance companies to have adjusters on the ground in Colorado to assess houses and replacement costs.
Olivier said she was happy that the bill extends the time homeowners have to make claims, but she said the insurance claim and recovery process has been is dysfunctional and more reform is needed.
“I am just appalled at the way they have treated me. It took practically an act of God, apart from the fire, to even get an adjuster to come to my home,” Olivier said. “Even though I have been working at it almost full time, and my house still exists … I’m still nowhere close to done and a lot of this is the decline, delay or avoid tactics.”
Walker said insurance companies estimate 90 percent of the fire-related claims from homeowners have ended with a settlement. She said that doesn’t mean all of those cases have been paid out or that homes or rebuilt, but just that an agreement has been reached.
“In Colorado Springs, I think because that community has come together with the work, it really has been a model for recovery and rebuilding the community,” she said.
Contact Megan Schrader