This column is a three-alarm fire call for all Idaho residents. My law practice is limited to handling insurance claims and conducting mediation and arbitration. I have focused upon resolving insurance matters for 35 years.
Nine years ago, I handled six claims for insurance losses in the Pocatello area when the Charlotte Fire started in wildlands and destroyed 66 expensive homes. Most of those claims involved losses where the insurance was inadequate to cover the replacement of the destroyed house and/or its incinerated contents.
Fast forward to our current drought conditions; I’m already seeing fire claims for homes that have been totally destroyed. Many homeowners in Idaho are underinsured for the value of their structures, and we are already “engulfed” in an early fire season.
The devastation of losing your home containing items that evoke historical memories overwhelms many people and can send them into a deep depression; that is compounded when you don’t have enough insurance to replace what you have lost.
Why are so many people underinsured? The primary reason is that all of Idaho has experienced dramatic increases in the value of real estate due to the pressures coming from buyers pouring into our beautiful home.
These price increases appear wonderful, but they have set off a ticking time bomb. Many insurance policies sold these days indicate on the declarations page that you have coverage that will replace your home, but this representation isn’t always valid. Provisions contained elsewhere in the policies often limit the amount of coverage by using formulas tied to the amount of coverage purchased.
Many insurance companies have changed their policy language for insuring structures. Replacement cost isn’t guaranteed in these misleading policies. Homeowners do not appreciate or understand these subtle differences until their home has burned to the ground. Not all policies are written this way, but many contain confusing language that misleads average consumers.
Insurance companies and their agents have a legal responsibility to protect and properly advise their insureds. Under well-established Idaho law, they are charged with a professional duty of care to their clients that is comparable to the responsibility of a doctor, a lawyer or an accountant to their patients and clients.
However, I frequently encounter cases where agents and their insurance companies are negligent and sometimes grossly negligent in performing these services for their insureds. If you are an agent who likes to sell a policy and then sit on your laurels or spend your time solely selling new polices, you should substantially raise your malpractice coverage. It’s tinder-dry in our high-mountain desert state replete with wooded and brush-filled wildlands!
Some residents are buying insurance coverages online, and they are not receiving the assistance of an actual live agent who can properly advise them regarding what is needed for full protection; don’t make that mistake.
Between the existing drought and extraordinary price increases in the values of your homes (with widely soaring construction costs), there is a good chance you aren’t carrying the proper amount of coverages needed to replace your homes and contents.
It isn’t expensive to increase coverages to levels that will protect what are typically your most valuable assets. We are talking peanuts in comparison to profound insurance deficits that will force you to use your contents coverage to actually replace your home; try that on for causing added depression.
Please contact your agents immediately (if they haven’t already called or written advisory letters). Review the amount of coverages you maintain on your properties. Raise your limits in order to be properly covered, and err on the side of being over-insured. Also ask your agents to explain how replacement cost coverage works in your policy if it is represented as a policy endorsement or available coverage; you may become “educated/enlightened” when you have that conversation.
There are some insurance agents out there who may not appreciate the extra work generated by this column, but if they have a lick of common sense, they should already be reviewing the policies they sold to their insureds to avoid exposure for substantial malpractice claims.
Sadly, more catastrophic fires are likely to happen in Idaho and throughout the West this year. California’s severe drought conditions have already triggered a record setting number of small wildfires ahead of the normal fire season and Idaho is no different.
The insurance industry in the gem state should be mobilizing to “insure” all homeowners have proper coverage during these challenging times.
Solve this problem by immediately calling your agents. You may not need to increase limits, but wouldn’t you rather have the peace of mind of knowing that your most valuable property is fully covered and you will have the funds needed to replace your clothing?
Jesse Robison is a Pocatello native educated in Idaho. He works as a mediator and insurance claim consultant, but his passion is public art. Robison has spearheaded art improvements throughout Pocatello, including the Kizuna Garden located at the Pocatello airport, and serves on the Bistline Foundation.