Insurance shortfalls stall rebuilding Calif. homes
“We just kind of thought we were taken care of. If I had to do it over again, I’d probably change my mind and move.”
SANTA ROSA, Calif. — Construction crews have already put up the frame on Cheri Sharp’s new house, but she still questions whether rebuilding was the right choice after California’s most destructive wildfire took her old home in wine country nearly a year ago.
She has had to dip into retirement savings to cover a $300,000 shortfall in her homeowners-insurance coverage.
“We just kind of thought we were taken care of,” Sharp, 54, said about her insurance policy. “If I had to do it over again, I’d probably change my mind and move.”
The wind-whipped wildfire that tore through Northern California in October 2017, killing 22 people and destroying more than 5,500 structures, left many people in Sharp’s position: underinsured and having to scramble for money to build a replacement home on their property.
Santa Rosa was the hardest-hit city: Entire Cheri Sharp and her husband, Paul, talk with a contractor about the rebuilding of their house in Santa Rosa, Calif. The couple had to dip into retirement savings to cover a $300,000 shortfall in their homeowners-insurance coverage after a devastating 2017 wildfire. neighborhoods were burned to ashes. But as of late August, only nine of nearly 2,700 single-family homes lost in the city had been rebuilt, according to figures from the city’s permitting office. In addition, 520 or so were under construction.
Many homeowners say they are locked in negotiations with insurance companies for additional money to cover the cost of building a home at the edge of the San Francisco Bay area, where a technology boom has sent home prices skyrocketing. That, coupled with competition among neighbors for construction crews and materials, has left many homeowners hundreds of thousands of dollars in the red.
For Santa Rosa native Alex Apons, 34, the insurance shortfall on his home in the tidy Coffey Park neighborhood was $200,000. He and his wife wanted to stay because they had a baby on the way, and both have deep Cheri Sharp, California resident
family roots in the area. They used every insurance dollar they received to pay off the mortgage of their 4-year-old home that burned. There was nothing left for a down payment on construction.
“We had to drain our bank account,” said Apons, now father to a 5-month-old boy, Etienne. “After everything is built, we’re looking at a monthly payment on that loan that’s $1,000 more than what our mortgage was before.”
Other fire victims are still torn by indecision that has kept them from committing to a rebuild — do they stay and bear the costs, or start over elsewhere?
“The idea of leaving California is very hard, but on the other hand, I don’t know if I can recover from all the trauma of it without removing myself from all the stimuli,” said Katherine Gaynor, 67, also a former Coffey Park resident.
Besides the Santa Rosa blaze, several other major wildfires the same month took out thousands of homes elsewhere in Sonoma County and in neighboring Napa County. As of April, nearly two-thirds of those fire victims wanted to rebuild, but most had yet to settle insurance claims for their property and belongings, according to a survey by United Policyholders, a San Francisco-based nonprofit that helps people understand their insurance policies. Two-thirds of respondents reported being under-insured by an average of $317,000.
When Apons’ wife, Heather, called their insurance company this month to request a new homeownersinsurance quote, the agent provided a figure that would pay them $340,000 less than the current price tag to reconstruct their house. The agent said better coverage would raise their premium considerably, she recalled.
“I’m like, ‘I don’t care. I don’t ever want to be underinsured again,’” she said.