Wildfire survivors are finding out they are underinsured after losing their homes
As many as two-thirds of fire victims are uninsured or underinsured, according to the consumer advocates at the non-profit United Policyholders.
Most people don't know the ins and outs of their homeowner's insurance policy, and even if they do, they often buy it and let it sit instead of revisiting the policy each year to make sure they have enough coverage to rebuild.
After turning in 40 applications, Kevin and Annemarie Pazmino finally found a new place to live, after the home they shared with two children, Lucille and Joaquin, burned to the ground in Altadena.
KCAL News met the family in January as they returned to see what was left amidst the rubble following the Eaton Fire.
"I have anxiety over everything. So, it's really, really hard," Annemarie said.
With their rental search behind them, the Pazminos looked into what it would cost them to rebuild.
"I've learned with insurance that we didn't ask any of the right questions," Annemarie said.
The answers they're getting now during the rebuilding process weren't what they expected.
"So, we are grossly underinsured, and our insurance agent said that's very common," Kevin said.
Their homeowner's policy hadn't been updated since 2017, when the cost to build was well below what it is now. They also took money out of the house for renovations and didn't increase their policy. Those common mistakes will cost them at least $100,000
"There are so many aspects of insurance that are so unknown to people and that can't be singular to us," Annemarie said.
Amy Bach is with United Policyholders, said everyone should be taking inventory of their coverage each year and if your insurer tells you that you don't have enough coverage, increase your limits.
"You really need to tell your insurance company, 'I'm relying on you to fully insure this, my dwelling, and I'm counting on you,'" Bach said. "Because if they tell you, you need to increase your coverage and you don't, it's going to be on you if you come up short."
Bach said the way to know if you're short is by taking the amount of coverage on your dwelling, then divide that amount by the square footage of your home and if the result is at least 300, you are adequately insured. But Bach also said costs can vary widely, based on where you live and the type of home, so experts say, you may need upwards of 500 a square foot to rebuild.
The Pazminos don't know how they'll ever afford to own a home again.
"I don't have any money to start rebuilding. I can't get a construction loan without money down because all our money was in the home," Kevin said.
For now, the Pazminos are in a rental for a year. They're hoping the government will come in to offer low-interest construction loans. Beyond that, they're taking things day by day, which isn't easy.
"I want to have the hope, I want to believe that our neighborhood can be what it once was, but how is that going to happen?" Annemarie said.
United Policyholders suggests getting everything in writing. They also say to ask your broker if you have enough coverage on your home and if yes, save that email.
