Wildfire Wake-Up Call: How To Protect Your Home and Finances If Disaster Strikes

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2:53Otherwise, 1.00 % APY applies. No min balance required. Chime card on-time payment history may have a positive impact on your credit score. Results may vary. See chime.com for details and applicable terms. I'm Nicole Lappin, the only financial expert you don't need a dictionary to understand. It's time for some money rehab.

3:16Hi, money rehabbers. It's Pamela Moscarra, a.k.a. Law Mother. I'm a lawyer specializing in growing and protecting your wealth. And this week, I'm filling in for Nicole while she's out on maternity leave. The recent wildfires in Los Angeles have left many families devastated, facing the unimaginable reality of losing their homes. As you all know, this happened to Nicole. But even for those who still have a roof over their heads, this is a wake-up call. If disaster strikes, will your insurance company actually have your back? Today, we're talking to an insurance lawyer who helps homeowners fight for the payouts they deserve.

3:52Whether you've lost everything in the fires or just want to make sure your policy is solid, this conversation is for you. Welcome, Susan. Can you please introduce yourself? I'm happy to be here. Thanks, Pam. My name is Susan Mina Mizono. I've been an attorney since 2008, originally from Southern California, where I actually represented insurance companies, I made the move to Colorado in the last eight, nine years. And so I've been doing this insurance coverage and bad faith litigation work at the law firm of Levine Sick Cough since I've been here. Thanks, Susan. Let's start by talking about homeowners who lost their homes.

4:32What should a homeowner do immediately after their house is destroyed? Yeah, and that's a really important question, Pam. Before I start answering, I just wanted to insert a disclaimer, as we attorneys like to do. So what we talk about today is not offered as legal advice, but that our chat today really is for informational purposes only. So, yeah, to answer your question, Pam, what should a homeowner do immediately after their house is destroyed? Take a pause. Surround yourself with all the support you need. And then as soon as possible, number one, contact your insurance company, notify them of the loss and request a certified copy of the policy, which means essentially you want the complete copy of the policy.

5:20OK, so you could check for coverages and limits. Number two, start keeping receipts of all your expenses. So for your hotel stays, meals, clothing, transportation, all that could be reimbursable under what's called ALE coverage that we'll probably touch on later. And number three, I would start getting rebuild estimates, especially if your home has been destroyed. I know it's a really emotional time and it's hard to put everything together, but you should start contacting local licensed contractors, essentially because what I've seen, at least with the clients that I represented who are affected by the Marshall Fire here in Colorado, the clients that contacted contractors within weeks, right, of the loss, were one of the first ones to rebuild in their communities.

6:09You're going to be stuck in a queue, right, if there are hundreds or even thousands of homes that were destroyed in a fire. Better yet, if your whole neighborhood was affected by the fire, find a mass builder with your neighbors who might be able to rebuild multiple homes at a lower price. So those are the three things that come to mind. Very helpful. I think one thing that you mentioned was a certified copy of your policy. And for those who don't understand what that means, could you just maybe expand on what that is and why that's so important? Yeah, because oftentimes when you access your insurance company portal, you'll get a summary, right?

6:47Or maybe you'll just get the policy declaration pages, which is essentially the first two or three pages of the policy that lists the policy limits and the types of coverages you have. What you don't have is the bulk of the policy language that lists all the exclusions and conditions and payout arrangements, that sort of thing. So when you ask your insurance agent or broker or the insurance company directly, hey, I want to certify a copy of the policy, they're obligated to send you the entire policy. And then the other thing you mentioned is if you are in a neighborhood, and I know the Marshall fires here in Colorado, and we've been talking about Nicole, who is in Los Angeles with the LA fires, you mentioned the tip about getting together with your neighbors.

7:28And if there are larger builders who will build kind of the homes together, does it matter that multiple neighbors might have different types of insurance carriers? Like, does it have to all be the same insurance carrier? Or can you explain, expand a little bit more on that? Yeah, it doesn't have to be, right? It's essentially, yeah, every homeowner has to approach their insurance company separately. But what a mass builder will typically do is because they're building multiple homes within a close proximity at the same time, their prices go down. And oftentimes insurance companies like that, right?

8:02It's closer to probably their low ball estimates that they issued at the beginning. What's the best way to document damage for an insurance claim? I can't stress enough, Pam, put everything in writing. You want to avoid, as she said, they said situation. I've seen folks keep journals, for example. So they would write down every conversation, phone call with the insurance company, noting dates and names and details of the conversation. For the really important conversations with the claims adjuster, you should email a summary of your phone conversation after you had it and include at the very end of the email, please confirm in writing as soon as possible if my understanding is incorrect.

8:51That way, the adjuster would, I believe, feel compelled to respond as quickly as possible if, in fact, your summary was incorrect. Another thing is take clear photos and videos of your home, your property. I know that could be a tough one. So ask a friend, ask a family member if they're able to take their phones and take pictures of the neighborhood, of the home, whatever's left standing. And then start an inventory list if you don't have one already. Document the items that you had, the rough purchase dates, brands, estimated values. again, get family and friends involved and to spend a few minutes every day on that.

9:32Cause that is a really, really big task. So you really want to chip away at it a little at a time. You mentioned kind of your emails to the adjuster, your claims adjuster, you have a phone call with them, send them a summary of what you did. I guess something that comes to mind or a mistake that I've seen is people not realizing that what you put in email could become evidence down the road in a trial. So can you touch base on maybe what you wouldn't want to include in the email and some tips around that if you are sending summary emails afterwards, some do's and don'ts? Yeah, such a great point.

10:08I think it's, I usually take the step away from the computer rule for every email that I send, especially to opposing counsel. We know we do this. And so if you're feeling extremely emotional, right, about a conversation, go ahead and type it, but don't send yet. Keep the tone as professional as you can. Don't insert too much of your opinion of how this claim is going. I wouldn't also actually bring up, oh, well, this is what an attorney told me, and this is bad faith conduct and blah, blah, blah. Simply write down what exactly the juster told you with respect to the claims handling and keep it as factual as possible.

10:54Yeah, you touched on that for a moment. And it made me think about social media and the mistakes people make where they're then posting on social media certain things about what happened and what people have said. Can you touch on that as well? That's a really tough one, right? Because unfortunately, I know, and I've seen it with the Marshall Fire survivors, that's their community, right? They're all going through extremely devastating event, and they're doing it together. And so interestingly enough, sometimes though, the clanging bell does get the attention, right? And so there, yeah, there needs to be a, there needs to be a balance.

11:33And I don't, I'm not sure how I can really suggest what that balance be. But certainly, yeah, I think you do, you do want to be careful. You don't want to, again, I would just step aside, even if you're about to post something because you're so mad, right, on Twitter or Instagram, just step aside and just think, okay, is this going to affect claims handling moving forward? And honestly, I think there are some claims adjusters who do react to how the homeowners may communicate to them, right? And they could, and I've seen it in communications and the claims that I've helped or suits that I've helped handle, where you have a difficult client, you have a difficult homeowner.

12:18And the responses by the adjusters are pretty astounding. I think they're, they're probably pissed off and taking things personally. And so if you could tone down as hard as it is, right, because again, it's an extremely emotional, devastating time. Just just check yourself, right. And to step back and ask yourself, if I were in the claims adjuster shoes, how would I want to be addressed? Yeah. And I think, at least from my experience too, where people make mistakes is the adjuster, if you keep in mind down the road, if this ends up in trial, which most cases will resolve, but if it does end up a trial, if the adjuster is being inappropriate in emails to you and losing their mind, that's all going to help your case.

13:04And the evidence is going to be you being professional, you being calm, and whatever you put on social media is pretty much going to be fair game in the case. And so knowing, I think a lot of people think, oh, I can just delete the post later and that's destroying evidence. So I feel like it's always like, that's the after the fact, the reaction afterwards where people are like, oh, I wish I wouldn't have made that post on social media. I didn't think it would come into my case and it will. So you're, once that happens, everything you post online is fair game. Yeah, you're absolutely right. Are there any deadlines homeowners need to be aware of when filing a claim?

13:41It really is dependent on your policy. And that's why I can't stress enough how important it is to get a complete copy of your policy. There might be a claim filing deadline. Oftentimes, policies will just say file your claim within a reasonable amount of time. What does that mean? So yeah, Yeah, just check for a certain language. Some insurance policies might require you to file a kind of more formalized proof of loss, which is essentially a one or two page document that you may or may not have to notarize, essentially just saying, yeah, I lost my home, right, with the date. And when the event of a declared state of emergency, like the one currently in LA, there are laws, again, this differs state by state, but there may be laws that would extend certain deadlines for things like collecting benefits for additional living expenses, or allowing additional time to capture depreciation while you're rebuilding.

14:41So yeah, and I think it's as a layperson, the best way to find out again is going to your Department of Insurance, the state's Department of Insurance website. And oftentimes, the insurance commissioner will post summaries of laws that might be applicable to your loss. What are the most common reasons insurance companies deny or delay wildfire-related claims? I think the problem really comes down to, number one, the dispute between the insurance company and the homeowner regarding the extent of the damage, right? And so insurers companies from the get-go, typically, they'll undervalue rebuilding costs.

15:23They use cost estimating software that may or may not be accurate in the event there is a total loss. And of course, this will lead to a lot of back and forth between insurance companies and the homeowners and their contractors, right? example, I do have family members who were affected by the LA fires recently. They had a pushback against their insurance company because they were lowballing them with respect to repairing the smoke damage at their home. And I think like a lot of the smoke claims fall into this category as well, because of course, there were a lot of homes destroyed in LA fires, but there were also what's called standing homes, right?

16:03The homes that got smoke damaged, but are still standing. A lot of insurance companies will say, oh, yeah, it wasn't destroyed, but we all it just only needs a light cleaning. Right. And they won't pay for any type of post cleaning testing by an industrial hygienist to make sure that the light cleaning was enough. So, again, there's a lot of back and forth. Right. And that can cause the delays. And incredibly, some insurance companies will go to the point of disputing the cause of the damage. So you have a fire, right? And again, a smoke damaged home. And some insurance companies will argue that there were pre existing issues, like wear and tear, right, that contributed to the loss.

16:47For example, I represented clients in the Marshall Fire here in Colorado, whose home was heavily smoke damaged and heat damaged. And the insurance company refused to pay for the replacement of the heat damaged windows because of the age of the windows. I can't say insurance companies are deliberately denying and delay wellfire claims, but certainly there's a lot of just dispute. I think it comes from insurance companies from the outset, low balling, right? The repair costs or the replacement costs from the beginning. Well, thanks for sharing that. And I'm sorry to hear that your family members have had to go through all that and have had that loss.

17:29It sounds like what you're saying is homeowners should push back if they feel like their claim has been undervalued. Is that your thought? Yeah, absolutely. It would start off by getting, again, your own estimates, getting that, finding that licensed contractor. And if you have concerns that you've been going at this for a few months, another thing that you can do is contact your state's Department of Insurance. And they'll allow you to file an online complaint. And what happens typically is that the Department of Insurance will forward your complaint to the insurance company and give them a certain timeframe to respond to the homeowner's complaint.

18:10So you may see some movement, right, after that. You may not. But that's certainly a good avenue. Obviously, if that doesn't work out, seek legal help from a qualified law firm that specializes in insurance coverage and bad faith litigation. Hold on to your wallets. Money Rehab will be right back. And now for some more Money Rehab.

18:42You mentioned earlier when you're emailing your insurance adjuster, don't be like, this is bad faith. But could you talk about what are the signs that the insurance company is acting in bad faith and what should homeowners do about it? Yeah, separate flags obviously include the repeated delays, right? You're going to find yourself, unfortunately, especially after a wildfire or a mass disaster situation, multiple adjusters on your claim, because there's just not enough staff, right, to keep to handle all these claims. And so I think it's problematic, though, if these adjusters keep asking for more paperwork and sometimes for the same paperwork that you submitted previously and the claim is barely moving forward.

19:26That's certainly a red flag. Another one is a claim denial with no clear explanation. I've seen letters that look like someone just cut and paste policy language that doesn't apply to the reason of the denial, at least from my perspective. So if you're seeing a lot of that, certainly that could be a sign. And then again, like the lowball offers, expect a lowball offer at the beginning. But if, again, the needle doesn't move too much, despite you submitting multiple contractor estimates, there's still an insurance company is still saying, nope, our vendor and our consultant is still saying it's the repair should take or should be$50 ,000 less.

20:11That could also be a sign. You mentioned this relationship and documenting and that you might have lots of adjusters. And earlier you mentioned this tip that I want to highlight here that keep records of everything you're all when you're talking to who, what they're talking about, send an email afterwards summarizing. And I just want to highlight it here because I don't think people really realize if they're not in your position that the insurance company is keeping detailed records. So there on their end, there's a claims file where every adjuster is documenting every interaction with you, what you say.

20:46And sometimes it might be right. Sometimes it might be wrong. And until you get to the point with having a lawyer, there's no one on your side doing it unless you do it. And have you found that that's really helpful that people do that from the beginning? I found it extremely helpful. I've had very detail-oriented clients who, from the beginning, took copious notes. And you're correct. I think claims adjusters do try their best to accurately memorialize their conversations with homeowners. But I will tell you that there have been plenty of claim file notes that I've seen that are missing key information that are found somewhere else in the claim file, right?

21:32That aren't necessarily noted by the adjuster during the phone conversation or soon thereafter. Yeah. And for you as the homeowner, this is a very critical moment in your life, a very important moment in your life. For the claims adjuster, they have a huge caseload. They're dealing with multiple clients. It's very easy for them to not get to things. And so you doing that is so vital. At what point should someone bring in an attorney to fight their insurance company? Yeah, it really depends on the state where you live in. But typically, when you're pursuing the court of bad faith, there's a statute of limitations of two years, essentially what that means you have two years from oftentimes a date of loss to file the suit.

22:19Wow. But but certainly you can calculate the two years from the date the homeowner realized that there was bad faith conduct by the insurance company. But all that said, I wouldn't wait longer than a year and a half before contacting an attorney just because there are these statute limitations issues just to get an evaluation right early on to determine if there should be a lawsuit filed. And I will say that for the Marshall Fire cases, I remember filing multiple complaints around Christmas. And so as a lawyer, I definitely would appreciate the more advance notice. Well, you touched on something there because I guess in the beginning, if you're not sure what to do, how to correspond with the claims adjuster, you're not really sure if you're...

23:16I guess there's probably some people who don't want to feel like they're overreacting. And there's probably some people who just don't know what they don't know. Is there ever too soon of a time to reach out to a lawyer? Can you, the moment it happens, could you reach out to a lawyer and start getting some support? I don't think there's a time that's too early to contact an attorney, but certainly there are resources out there for climate disaster survivors to consult with before contacting an attorney. For example, there's a great nonprofit organization called United Policyholders who provide various resources online and over Zoom who've really been there for a lot of victims of climate disaster events here in Colorado, in California, in Hawaii recently.

24:06And they have an incredible online library and their website is uphelp.org. uphelp.org. And so as a homeowner, that might be a good place to start to say, hey, do is this conduct normal? What should I do? What are the next steps? I think there's some really good tips in there. And then if you feel like, okay, yeah, the insurance company is still acting badly with respect to my claim, it might be time to hire or at least talk to a lawyer. How much does it cost to hire an insurance lawyer? And are there contingency fee options? Again, it depends on the state where you live. There are attorneys who do this on an hourly basis, but many of them do work on a contingency basis, which basically means you don't pay anything upfront and that the lawyers would only get paid a percentage if you recover settlement money or win at trial.

25:00Just a side note, some states, and I believe California is one of them, if you're an insurer or acted in bad faith, you could pursue attorney's fees. And then you mentioned some resources that were available to help homeowners navigate this. Are there any state or federal specific resources in addition to the nonprofit that you recommended? Yeah, as I mentioned, the state Department of Insurance websites are just chock full of information. And so you definitely want to start there. A lot of the governmental agencies will also hold in-person disaster recovery center settings. I know right now, I believe there's a few in California, including one at UCLA.

25:47Also though, while you're in the middle of an insurance dispute, and if there is any concern that you don't have enough insurance funds to rebuild, start looking into FEMA grants and SBA loans. I know a lot of clients who were able to bridge the gap using those grants and loans. So for homeowners and renters who haven't lost a home, but they've just heard this in the news, they're feeling concerns, preventatively or in advance, what should homeowners look for in their policy to ensure that they're covered for certain types of climate disasters? Get as much insurance as you can. I can't stress that enough.

26:28Like I mentioned earlier, a lot of these cost estimating software that insurance companies use really just fall quite short when it comes to a total loss situation. If you're just going to repair part of your home or replace your roof, sure, these policy limits are never reached, right? But if your home was to be subject to complete loss, that's a different story. There are additional coverages like extended replacement coverage. Some states will, and some insurance companies, depending on the state, will offer 25, 50, sometimes even up to 100%. Buy it. Get everything you can. Sometimes you'll have more options by working with an insurance broker who sells policies issued by not just one, but multiple insurance companies.

27:20So you can also keep that in mind. You may need to buy a separate policy for certain climate disasters like earthquakes and flood. In California, you would need to buy a separate earthquake policy. And Pam, in a prior episode on this podcast, you're talking about protecting your assets. And you shared with Nicole about how important it is to look at insurance policy exclusions, yeah, you hit the nail right on the head. These exclusions are sometimes so confusing, right? They're fine print. They're buried within even more complex policy language. So if you take a look at your complete policy and you're thinking like, oh my gosh, I see these exclusions, but I don't understand them, reach out to your insurance agent or broker or an insurance coverage attorney who does this work.