Residents under reconstruction, business owners face a daunting insurance situation
Residents and business owners who lost everything in the Marshall fire face a daunting insurance situation in which skyrocketing property values and supply chain shortages make it unlikely that many Home or business insurance policies cover the full cost of the rebuild.
“Statewide we’ve seen all of these increases in property values, and a lot of times the policies don’t follow suit,” said Brad Levin, partner at the Denver Levin Sitcoff Waneka law firm. “It’s a real problem.
Levin and Nelson Waneka, also a partner at Levin Sitcoff Waneka, represent policyholders against insurance companies. Their experience includes portraying people who lost their homes in the October 2020 fire, the second largest blaze in Colorado history. On Friday, they spoke to BizWest about the challenges homeowners and business people face when dealing with insurance companies.
“I am confident to say that the vast majority of Coloradans are underinsured for their home,” Waneka said. “It’s even more than just real estate values. The cost of construction has increased further.
In the Boulder area, average median selling prices are hovering near all-time highs set earlier this year. And the construction industry suffers from shortages of everything from steel and lumber to asphalt and labor.
“The cost of rebuilding a house increases far more than inflation,” said Waneka. “It is even more acute in areas at risk of fire. All the entrepreneurs in the region are going to be inundated… Then you have the COVID supply chain issues which are still there and are likely to get worse. It is like lifting the tax after a hurricane. This is the only way I can describe it in terms of the cost of rebuilding.
Levin said some policies may be accompanied by increases in inflation, but these often do not match the actual rate of inflation. Often times homeowners and business people will buy the most affordable policy and then fail to update their policy limits because they sit unused for years. And insurance companies and agents won’t always notify policyholders when they’re covered for less than the cost of rebuilding.
“For these catastrophic big losses with so many people, they often find they can’t rebuild the house they thought they could,” Waneka said.
Another problem that has arisen as a result of forest fires is the refusal of insurance companies to take out fire insurance policies in high risk areas. It’s happening in many mountain communities in California that have been affected by wildfires, and it’s starting to happen in Colorado as well.
“I think we’re seeing it already,” Levin said. “We are hearing about this in Grand County. People have huge problems finding affordable insurance. Businesses say there are certain areas they just won’t write.
Waneka added that he had struggled to find affordable insurance for his own home in the mountains.
Hopefully residents of Louisville and Superior don’t have to deal with this, Levin said. The problem has so far been limited to mountain forest communities.
“It seems like an incredibly unusual circumstance,” Levin said. “I hope Louisville and Superior don’t have the same kind of repeat problem.”
For homeowners and businessmen who suffered loss in the Marshall fire, Levin and Waneka said that, as difficult as it may be, it’s important not to be intimidated by their business companies. assurance.
“It can be a very intimidating experience at a time when they are depressed like they are,” Levin said. “It becomes a very arduous process. Can you imagine having to make a list of all the personal belongings you own? Very few people have this kind of preparation. If you make a complaint, stick to it. Don’t just take what the insurance company says.
Waneka added, “Keep it up. Don’t lose faith. Go ahead and put everything in writing and don’t be afraid to back down if you don’t agree with something the insurance company says.