Insurance coverage

Colorado Legislators Propose Changes to Wildfire Loss Insurance Coverage | Legislature

Less than two months after the Coloradans suffered the most destructive wildfire in state history, lawmakers are trying to change how insurance companies handle losses from wildfires.

If passed, House Bill 1111 would increase the amount lost property insurance providers must cover up front and extend the time victims have to rebuild their homes. The proposed changes would only apply to future declared fires, which would not help victims of the Marshall Fire that destroyed more than 1,000 Boulder County homes in December.

Sponsor’s representative Judy Amabile, D-Boulder, said the bill was inspired by the East Troublesome Fire, the second-largest wildfire in state history that burned 193,812 acres in Grand County as of October 2020. Colorado’s first and third largest Forest fires also burned statewide in the same year.

“We have heard from many people that they have suffered a second trauma after losing their homes. That trauma was figuring out how to get their claims processed and how to get paid what they felt they owed,” Amabile said. “This bill won’t help people in the Marshall fire and it won’t help people in the East Troublesome fire, but it will help people in the next fire.”

At the bill’s first committee hearing on Thursday, dozens of wildfire victims said increasing lost property coverage would be particularly helpful. Under the bill, insurers would be required to cover at least 65% of the value of lost property in advance. Current law requires only 30% to be covered without victims creating an inventory of their lost property, a process victims say is unnecessarily difficult and traumatic.

Jon Pratt lost his Grand Lake home to the East Troublesome fire. A State Farm customer for 45 years, Pratt was forced to document every item in his home in order to receive more than 30% of the value – including age, condition, cost of each item, where it was purchased and proof of purchase.

“We’ve been through hell. It took us eight months — my wife was crying over and over and over — to document it all,” Pratt said. “4 ounces of mustard, one full in the cupboard, one half full in the fridge. Salt. Pepper. Items $1 up to $80,000. Then you submit it, and they don’t pay you.

Pratt said it took him more than a year to settle his claim with State Farm after the company offered him a payout of 50% of what they ended up settling. He said the company ignored photos of the house, official quotes and rebuilding plans and they were still in dispute over extra payments.

“We had to fight tooth and nail for every nickel we got,” Pratt said. “I spoke to four lawyers over a period of a year and along the way everyone said the same thing: ‘Their goal is to pay as little, as slowly as possible.’ I can attest to it. … This bill does not solve everything, but it does go a long way in moving things in the right direction.

Other victims of the East Troublesome fire spoke of similar issues. One victim said her inventory totaled over $500,000, but 16 months later she had only received $209,000. Another victim said his insurance company ignored photos and plans of his house and two months after the fire he had received no help or response, while others with different insurers had already been paid and lived in a rental house.

Mark Reinowski, who lost his home in the Marshall fire, said those insurance issues haven’t changed since the East Troublesome fire. Reinowski said his insurance company, Amica, only offered him 30% contents coverage without inventory, while his neighbor’s insurance companies offered between 75% and 100% upfront without inventory.

“(Those who lost their homes) didn’t know they would have to fight for it,” Reinowski said. “It’s really about bringing the bar up to par with the best practices that already exist with some insurers in the industry and alleviating that homeowner anxiety.”

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The bill would also require insurance companies to give wildfire victims more time to rebuild their homes, covering victims’ living expenses and providing a primary point of contact. Currently, insurance companies only give victims 12 months to rebuild. Under the bill, victims would get a minimum of 24 months with two options for six-month extensions. Victims could also rebuild in a different location or buy a new house instead.

Grand County Builders Association consultant Bob Hughes called the current 12-month deadline “virtually impossible” due to shortages of housing, contractors and building materials in areas devastated by wildfires. Hughes, who lost his own home in the East Troublesome fire, came out of retirement to help rebuild after the fire.

“No homes in Grand County were rebuilt during this (12-month) period. Of 366, no one could meet these criteria,” Hughes said. “Less than 10 homes will actually be completed in the 24 month limit.

After more than three hours of testimony from wildfire victims and industry experts, the House Affairs Committee pushed the bill forward in a 10-2 vote, with Rep. Shane Sandridge, R-Colorado Springs and Rep. Kevin Van Winkle, R-Highlands Ranch, vote no.

Van Winkle said he’s not sure the bill adequately addresses the insurance issues wildfire victims face. Many victims have indicated that they are happy to take any action to create a better system. Craig Swift, who lost his home in the Marshall Fire, called the current system a “nightmare”.

“Insurance is meant to be there to help us rebuild our lives when the unthinkable happens,” Swift said tearfully, “and not to make the process as painful and as difficult as possible.”

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