Oakridge residents face insurance challenges

Most people who lived in the Oakridge Mobile Home Park in Sylmar lost their homes in one of the worst fires in Los Angeles history. Then they found out they didn't carry enough homeowners insurance to rebuild. Tomorrow at noon, KPCC's Off-Ramp airs "The Ashes of Oakridge," a documentary on the fire that destroyed Oakridge. As part of that documentary, KPCC's Frank Stoltze considered the problem of under-insurance.

Frank Stoltze: Nearly 500 homes burned at the Oakridge Mobile Home Park. Shirley Hunt's was one of them. She went back to the homesite several times to sift through the ashes.

Shirley Hunt: This the last time in, I think. I'm just taking a few stones. There's not much really survivable in this debris, as you can see.

Stoltze: The 74-year-old Hunt lived in one of the nicer spaces – up on a hill and next to some green space. She'd been there nine years.

Hunt: I'm priced out of the park unfortunately. I'm not coming back because the new homes coming in before the fire were between two- and three-hundred thousand and I wasn't insured for that much.

Stoltze: Hunt had never updated her homeowner's insurance policy.

Peter Morago says it's a common problem. He's with the Insurance Information Network of California, which represents insurance companies.

Peter Morago: Ya know, an addition was built to the home, a different garage or a new kitchen. And that was never updated. And if the agent or the company doesn't know that this is going on, then that coverage may not be enough.

There's other issues where the policy may be sitting in the drawer for 10 years and not be updated. And you have to understand that construction costs go up sometimes in the neighborhood of seven to eight percent a year.

Stoltze: It's unclear how many of the 482 families who lost their homes at Oakridge were underinsured. Russ Humphreys' insurance agency wrote many of their policies. He says he encouraged people to buy what he called "guarantees."

Russ Humphreys: If we insure a mobile home for say 100,000, then we are going to have a guarantee of either 110 or 125,000, whatever the insured selected to allow for inflation over the course of the year. It's not an exact science, unfortunately.

Stoltze: Amy Bach, who runs United Policyholders in California, says more than half of all homeowners may be underinsured, in part because some insurance agents and brokers "low ball" for business. That's undervaluing a home to offer a more competitive premium – even when people try to increase coverage.

Amy Bach: The most common situation that I have heard a thousand times, if I've heard it once, is that people have communicated with their agent. The agent assured them they had enough coverage. Even when they pushed back, "are you sure?" The agent said "no you're fine, don't worry."

Stoltze: One piece of advice: don't rely on a phone conversation with your agent to figure out the value of your home. See them in person.

Homeowners can negotiate higher payouts with insurance companies, or go to court. Tony Cignarele is with the California Department of Insurance.

Tony Cignarele: Ultimately the courts – if everybody did everything appropriately and the number is still wrong – there's still a gray area as to who is really responsible should that occur.
Stoltze: Although I understand that recent rulings have suggested that the burden falls on the consumer.
Cignarele: It does kind of skew the playing field away a little bit from consumers.

Hunt: It was a lovely place to live. It was very quiet.

Stoltze: Shirley Hunt loved the Oakridge Mobile Home Park. She had a space close to the foothills, and a spacious home.

Hunt: And it was 2,140 square feet, so it was a large. And now I'm living in a 680 square foot apartment. It's quite a change.

Stoltze: A change fire – and an underinsured home – forced upon her.