Additional Coverage:
- Three-fourths of homeowners may not have enough insurance to fully cover losses after a disaster, study says (newsbreak.com)
Wildfires in Los Angeles Highlight Underinsurance Crisis
As wildfires rage in Los Angeles, thousands of homes have been lost, prompting concerns about insurance coverage. A recent study suggests that the majority of homeowners are underinsured, meaning they may not have sufficient coverage to rebuild their homes.
Study Reveals Widespread Underinsurance
A study of the 2021 Marshall Fire in Colorado found that 74% of homeowners were underinsured. Of these, 36% were severely underinsured, with coverage amounting to less than 75% of their home’s replacement cost. This means that many homeowners could face significant financial challenges in rebuilding.
Insurance Companies Play a Role
The study found that underinsurance is not primarily driven by homeowner neglect or rising costs. Instead, the amount of coverage varies widely among insurance companies, with larger companies and those with a longer history of insuring homes providing more comprehensive coverage.
Challenges for California Homeowners
Homeowners in California face particular challenges due to the state’s wildfire risk and the exodus of insurance carriers in recent years. The state has implemented new regulations to address the issue, but consumers may still face substantial premium hikes in the wake of the current wildfires.