Poizner said his department was guided by a new doctrine that clearly made both the homeowner and insurance company responsible for making sure that the full cost of rebuilding a destroyed home was covered.
"The homeowner is responsible for keeping the insurance company up to date about additions and purchasing of new assets," he said. "If the homeowner does his job, then the responsibility completely shifts to the insurance company. They are experts in construction costs. Their job is to calculate how much you need to pay for a loss."
Brian Sullivan, an insurance analyst who publishes the Property Insurance Report, a national trade newsletter, said insurers had an economic incentive to sell customers as much insurance as possible. "Why in the world would they want to sell less insurance and take less premiums?" he argued.
That said, Sullivan noted that sometimes properties wind up being underinsured when overzealous agents undercut the competition to snag a new customer with a low premium that may not provide all the coverage necessary.
In the end, homeowners, particularly those in wildfire zones, need to be smart about protecting themselves in the unlikely event their house burns down. "Consumers have to be better educated about their own responsibilities," Sullivan said. "If insurers are going to sell you a policy that doesn't do the job, it's bad they did that. But, it's your house."
marc.lifsher@latimes.com
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(BEGIN TEXT OF INFOBOX)
Preparation eases the aftermath
Homeowners can avoid being underinsured after a major fire if they take some important steps -- before a disaster strikes -- that could save money and cut stress during rebuilding.
Contact your agent or broker for help in evaluating how much insurance you need. Get it in writing to avoid a "he said, she said" situation later.
Review policy limits every year. Make sure you report changes in your home's value, such as a new kitchen, bathroom or roof.
Keep accurate records of updates, renovations and improvements to your home.
Know the replacement cost of your home. It's probably costlier than you think. Ask local contractors what the current price per square foot is for a home similar to your own.
If you believe your policy limits are out of whack, ask your insurer to perform a comprehensive inspection of your home.
Call the state if you think you're getting the runaround. Contact the California Department of Insurance at
(800) 927-HELP.
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Source: California Department of Insurance
