The truth about fire insurance


Stanley Collis's dream home has a gorgeous view of the American River Canyon. But with conditions so dry, he knows it's vulnerable to fire.

"I think I do have enough insurance to cover my house because my house is only two-and-a-half years old and I know what it cost to build it. I built it."

A new report finds Collis is the exception. Consumer group United Policyholders surveyed 300 victims from last fall's Southern California fires. Three-quarters complained they were under-insured up to $300,000 short, each, to rebuild their homes. "It is very traumatic for victims, who are doing their best on the road to recovery, to find out that the insurance safety net that they thought they had has a giant hole," says Amy Bach of United Policyholders.

"The insurance industry and consumer groups widely disagree over who's to blame for this under-insurance problem. They point the finger at each other.

Do homeowners skimp on coverage to keep their premiums low? Do insurance companies under-insure purposely to keep pay-outs checks smaller?

"There's no plot or scheme going on the insurance industry to hold back coverage. Again, what we do is we provide information to the homeowner and then, at the end of the day, the homeowner makes the decision of what coverage should be purchased," says Sam Sorich of the Association of CA Insurance Companies.

Some of the victims of last month's big fire in the Santa Cruz mountains may be finding out they're also under insured. Collis can't imagine being in that situation.

"I don't know what you would do," says Collis.

United Policyholders says to check your policy. It estimates property coverage should roughly be the square footage of the home multiplied by $250 to $350.

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