Like a Good Neighbor – Will Our Insurance Companies Be There?

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With many of our fires not yet contained and firefighters all over Southern California still putting their lives on the line to save lives and homes, we have yet another firestorm coming over the horizon. This one is a Santa Ana of insurance companies pulling out of Southern California. With thousands of people displaced from their homes at the same time many others are struggling in the current environment to buy or sell homes, we now get this bulletin from Travelers Insurance –

Travelers has “Suspended Binding Authority for Coverage on Dwellings and Personal Property”for all of San Diego County, most of the Mountain Communities of San Bernardino County, portions of Orange County and LA County.

In fact, we are hearing from many sources that an insurance moratorium is in place by all companies for all of San Diego. We saw this in 2003 immediately following the Cedar Fire. At that time, individual zip codes were red-tagged; now, entire counties are affected.

Travelers – These are the guys with the “umbrella” logo, suggesting, I must assume, protection. According to their website:

Our success is built upon our ability to provide innovative insurance and risk protection products and services in-synch with our customers’ needs.

Guess what, Travelers? Your customers still have needs.

After the 2003 fires, things settled down within a few weeks, but it took at least one scathing expose by the San Diego Union Tribune and some political intervention. It will be interesting to see how Governor Schwarzenegger and Insurance Commissioner Poizner respond to our current situation.

I don’t pretend to be an expert on the insurance. Of course I know that these companies are there to make a profit and many do that part very well. After all, shareholders are expecting it. They, like me and most others, have bills to pay. But being my Pollyanna self, I cannot fathom people or companies who bail on others when the chips are down. I would like to think that they see their customers as more than lucrative actuarial tables. Silly me.

If you have a home in escrow now, insurability will be at least a near-term concern. We have one such home, scheduled to close in the next two weeks, which may experience delays. Many people throughout the region will be similarly impacted. To me, this defies logic. I can understand the need for an insurance provider whose corporate offices are located a thousand miles away and who is unfamiliar with our community to confirm the status of a given property. However, I find it unconscionable for this same company to decide that now, faced with claims from people who have paid (and paid and paid) for this very protection, they will take their ball and go home. They are in the business of making money, certainly, but their “product” is protection. Where did that umbrella go? There was no moratorium in effect when their was no foreseen, widespread threat. They happily collected their premium checks when blue skies were overhead. And, one could argue, our county is a much lesser “risk” today than it was yesterday.

We will be keeping an eye on the insurance situation over the next few days and weeks as we did during the Cedar Fire and will try to identify those insurance companies who stand up to the call. We hope that some will, and I just hope that the local and national media will expose the companies who, for the time being at least, don’t have the courage to live up to their slogans.

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