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Some California Wildfire Victims Discover They Were Underinsured

Many homeowners in the mountain communities of Southern California discovered in the aftermath of last year's wildfires that their insurance policies were not up to...
July 13, 2004

Many homeowners in the mountain communities of Southern California discovered in the aftermath of last year's wildfires that their insurance policies were not up to date.  Although many homes had to be rebuilt, some homeowners realized too late that their insurance coverage was insufficient.  Homeowners policies are of two different types, according to whether they pay a cash value or pay for the cost of replacement.  Depreciation is factored in cash value policies, but not in replacement cost policies.  Pete Moraga, spokesman for the California Insurance Information Network, emphasizes the importance of having coverage that meets the policyholder's needs.  An April network survey shows that over 80 percent of claims from the wildfires last October have been resolved.  At the time of the survey, insurers had paid approximately $750 million for claims that are expected to total nearly $2 billion.

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