California homeowners are not just facing losing their comprehensive home insurance and being forced onto the CA FAIR Plan for wildfire coverage. They are also facing lowball estimates and trouble getting claims paid by companies that dovetail with the FAIR plan to offer home insurance for everything else. In some cases, they are even cancelled by these companies after filing a claim.
All of the above happened to Gigi Bannister and her husband. The Bannisters are Veterans who have lived in Crestline in the San Bernardino mountains since 2003. That was when Gigi got Farmers home insurance. That same year, Gigi’s entire mountain community was evacuated for eleven days due to the Old Fire that fortunately did not cause damage to Gigi’s home. Farmers did not cancel their insurance then. But that is when Gigi’s broker gave them a heads-up on what was about to happen to people on the mountain.
“During the Old Fire in the Fall of 2003, my broker was advised by the insurance department that there was a black map,” said Gigi. “It’s a map only available to the insurance industry and the insurance department. It’s not available to the general public. It acts like gerrymandering of extreme high fire risk. After the 2003 fire, they just labelled our whole mountain as an extreme fire risk and then let insurance companies start dropping everybody.” Behind that map, Gigi said her broker told her, is catastrophe modelling software that brushes whole communities off as un-insurable in a one-size fits all approach.
In 2019, the tsunami of cancellations reached the Bannisters. Farmers, which had been charging an annual premium of $1,400 to insure their 2,000-square-foot 1946 gingerbread-style cabin, dumped them. Farmers never told the Bannisters why they were cancelled, and they had never filed a homeowner’s claim.
Gigi and her husband were forced onto the California FAIR Plan for wildfire insurance with a Difference in Conditions (DIC) wraparound policy for everything else from a company called Pacific Specialty. The FAIR Plan’s annual premium was nearly $2,000 a year, while the DIC cost $860. “Insurers are doing this and leaving us no options,” Gigi said. It goes like this, “I am a mortgage company and insist that you have insurance on the property you want to buy, I am the insurance company, and you cannot get insurance where you live. So how the hell do you own your property?”
As a former fire fighter, the threat from wildfire was never lost on Gigi. She has always kept her property as clean as possible. “I am taking out some trees that are leaning and as many branches as I can to CalFIRE’s recommended height,” said Gigi. “I am trying to remove any ground debris other than what is actually useful for the purposes of growing vegetable gardens and I am using raised beds to do that. I am tiering my backyard to prevent erosion. Then, I am removing weeds and anything that can grow wild, dry out and be a potential problem. Mostly I am trying to get rid of the skinnier trees and even some of the old growth trees.”
Gigi said she was never informed of any FAIR Plan discounts for wildfire mitigation. To get back comprehensive homeowners’ insurance, she would comply with mitigation instructions provided there was a guarantee of coverage, the steps were reasonable, and she could get financial assistance. “Who is going to pay me for all of that, who is going to come up with the money?” she said. “I get told about grants and programs and no one talks to me about it, they don’t get back to me.”
Once Gigi secured the state fire insurance with a wrap-around plan, she figured at least she was covered if the worst happened. But it turned out that when something catastrophic happened, she wasn’t.
From mid-February, through the start of March of 2023, a blizzard began in the mountains. The first in over a hundred years. “We experienced Snowmaggedon 2023,” said Gigi. “Snow accumulations rose almost to the top of our cabin doors, front and back. The weight of the snow was so tremendous it broke the windows and deck of our historic cabin. In fact, one window exploded across the room barely missing us.
“That night, an ice dam on the roof broke loose. It slid off the front sheering the fascia board. Ripped every rafter tail we had and took out our security cameras. The next night, at 3 am, it took out our deck splitting it in half lengthwise and causing it to collapse in the middle. Our whole house shook like it was an earthquake! My husband, 78, with Dementia and Parkinson’s and a Vietnam Veteran, was traumatized. I am a Grenada Veteran, with back injuries, asthma and PTSD, and was unable to do the manual work myself to get us out. I am the sole caregiver to my husband.”
The evacuation of the mountain and unavailability of contractors to give her a quote on damage repairs delayed her from filing a claim with Pacific Specialty, the company that sold her the wrap around policy. On March 31, 2023, she filed the claim and evidence of damages to the roof, windows, and deck via email. She also contacted FEMA about disaster relief. On April 2, she got a phone call while she was standing in line at the local library where FEMA had set up to take information from people like her petitioning for disaster relief. The man calling identified himself as a Pacific Specialty adjustor supervisor.
“He was very abrupt and told me they were going to deny the claim as to the roof and deck and not cover any of that,” she said. “The only thing they would cover would be the windows. After the deductible of $2,500, they would pay out $691.77 for the windows but we had $47,000 of damages to the roof and deck. He said they wouldn’t cover the deck because it had “not entirely collapsed.” I said that was ridiculous. We had just taken out a VA refinance on our home which took one and a half years to get approved. Every dime of the cash out went into the deck rebuild.”
On May 4, 2023, Gigi immediately documented a conversation she had with Pacific Specialty. In that memo, she said that whenever she called the claims department, she was told the claim could not be located so she could not get the claim resolved. No one from PSI was contacting her and the company was in violation of numerous statutory deadlines for both provision of her policy—she had asked for a copy of the policy and not just of the policy declaration page at the start of the claim filing—and to respond in writing on the claim.
Gigi got a check from Pacific Specialty on May 5,2023. By mid-May, Gigi still didn’t have a letter in writing from Pacific Specialty denying the claim, and FEMA had already denied help because the Bannisters could not produce either an insurance claim settlement or a denial letter. On May 17, 2023, she emailed the company: “California law requires an insurance company to investigate, process, and pay our claim fully, promptly and in good faith and deal fairly with us at all times. CA Ins. Code 790.03, 10 Cal Code of Regs 2695.9. ‘Bad faith’ conduct is ‘unreasonable’ conduct. It is unreasonable that Pacific Specialty Insurance has failed to reply to our repeated requests for written responses for our claim and claim denial.
“By Pacific Specialty Insurance failing to provide a simple written detailed of Denial of Claimin a timely manner – as is dictated by the California Insurance Code- it jeopardizes our ability to potentially recover other relief available under FEMA and other Federal or California agencies.
“This is unconscionable since it is by Pacific Specialty Insurance’s very denial which places us in this financially compromised position to begin with. PSI has placed the Bannisters in double injury and further exacerbated our damage from a situation from which we had believed to be covered by the nature of the elements in the area where we live. I.e., the San Bernardino Mountains at an elevation of 4700 feet.
“PSI has left our derrieres flapping in the wind as a direct and proximate cause of their negligence. We hereby demand a copy of the Denial of Claim to be emailed and mailed to us immediately in an effort to stop some of the hemorrhage of funds we have had to date from the recovery of the damages we continue to suffer, and which rightly should be covered under our claim.”
Gigi finally received the denial letter only on May 22, 2023. It was backdated to May 3. It stated: “While the policy provides coverage for some of the damage, we regret to inform you that the policy does not provide coverage for damage caused by any other peril other than fire and lightning to the roof, wear and tear, deterioration, rot or mold. We also not extend coverage for the deck as it was not a structure with a roof, and there was only a partial collapse.”
The poorly written letter suggesting that wear and tear was indeed covered along with fire and lightning to the roof went on to exclude the wear and tear that it stated was covered in the preceding lines: “We insure for sudden and accidental direct physical loss to property described in Coverages A [Dwelling] and B [Other Structures] except for damage caused by: Any of the following: wear and tear, electrolysis, marring, deterioration; rust or other corrosion, mold, wet or dry rot.”
But it was an ice dam—sudden and accidental direct physical loss to property—that caused the damage to the roof and the deck on Gigi’s property and not wear and tear.
The company’s parsing of the term “collapse” was creative. “Collapse means the sudden and actual falling down to the ground of a building or any part of a building.” The deck was still attached to Gigi’s house. It was not on the ground. Plus, Gigi had just had the deck refurbished prior to the winter season to qualify for a VA inspection.
Within a few weeks, Gigi received a notice from Pacific Specialty that they would cancel her DIC policy as of July 22, 2024. “They gave no information and why they dumped me but said that they would not renew or extend the policy,” said Gigi. The company did cancel the insurance. Her broker is looking for other wraparound options.
Gigi said that many companies offering DIC policies to accompany the CA FAIR Plan were now cancelling these-wrap around policies. “I found out that everyone up here that is with Pacific Specialty, State Farm, and others are cancelling wraparounds. Very few of us have full-on home insurance. Just wraparounds plus CalFair.”
At this point, Gigi wants to hold the insurance industry accountable via the courts, the legislature, and the Department of Insurance. “We want to effect change to force carriers and the Insurance Commission to reveal the black box risk assessment plans to be transparent to the public,” Gigi said. “We want insurance companies to write reasonable policies that do what they say and say what they will do. Which is to cover the conditions that are contained within the policy that they have quoted us, and that they honor the terms and conditions therein, and that they don’t cancel us the moment that we file a claim. We’re done with the dirty politics and lining the pockets of the insurance company investors, while their CEOs get huge bonuses, and we’re left without insurance for our mortgages and unable to fulfill our dreams and rights of homeownership.”
