By Jondi Gumz
Editor’s Note: Allegations in a lawsuit filed by a Boulder Creek homeowner in the wake of the 2020 CZU wildfire that rendered her home uninhabitable reveal the challenges for those filing claims with the insurer of last resort, the California FAIR Plan, operated by well-known insurers State Farm, Farmers, Allstate and others.
The following article contains information from the lawsuit.
I called the California FAIR Plan on its 800 line but was left on hold, listening to a never-ending series of messages, but not reaching anyone in communications. I emailed the California Department of Insurance, citing my deadline for Aug. 1 but I have not heard back.
So, there could be another side to this story, but insurance officials have not shared it with me.
•••
Sarah Mapel owned a 1,730-square foot home (3 bedrooms, 1 bath) at 300 Wooded Way.
Her FAIR Plan policy covered perils including fire.
FAIR stands for Fair Access to Insurance Requirements.
Coverage limits were $336,000 for repairs to the dwelling, personal property, $100,000, and fair rental value, $60,000.
She bought the policy in July 2017.
New Policy
Unbeknownst to her, the FAIR Plan had filed with the state Department of Insurance in October 2016 for a new policy with a new definition of “direct physical loss,” coverage for “smoke damage,” and mandatory dispute resolution for “smoke damage” claims.
At the time the new policy was approved by the state, the insurance commissioner was Dave Jones. He was succeeded by Ricardo Lara in January 2019.
Attorney Dylan Schaffer, who represents Mapel, alleges the FAIR plan told the state: “The changes in the policy will either provide no change in coverage or will provide some broadening of coverage.”
In April 2017, the FAIR plan told agents that the new policy amounted to a reduction in coverage and would result in denials of claim that would have been paid under the prior policy, Schaffer alleges.
The lawsuit reads: “From July 2017 to the present, consistent with its warnings to its customers, brokers and training of its adjusters, CFP had denied or partially denied at least hundreds of covered fire claims” — including one filed by Sarah Mapel.
Schaffer cites Jan. 4, 2021 correspondence from the state Department of Insurance to CFP during Mapel’s claim that “the Policy is illegal and that approval for the Policy was obtained by CFP in reliance on misrepresentations to CDI regarding coverage implications.”
After a year-long investigation, the state Department of Insurance concluded the FAIR Plan failed to provide coverage for all loss by fire as required, and its new definition of direct physical damage now was interpreted as requiring permanent physical damage, omitting coverage for smoke damage, which is a violation of state law.
The FAIR Plan rejected these findings.
“This is an unresolved issue that may result in administrative action,” the lawsuit states.
Mapel’s Claim
Mapel’s home and contents were damaged or destroyed by the CZU fire on Aug. 17, 2020.
She timely reported the loss of her home, its contents, and the need for fair rental value payments.
Here is a timeline of the response:
Aug 26, 2020: CFP terms the loss as “fair rental value,” omitting the actual loss of the home, repair and replacement of the dwelling and contents.
CFP hires outside adjuster E.A. Renfroe of Birmingham, Alabama, which uses Xactimate software to generate cost estimates. The appointed adjuster is Anthony Morris out of San Diego. He does not have a California contractor’s license, but he has guidance from Renfroe.
Sept 11: Morris visits the property, and stays two hours, using a flashlight to inspect, because power was out and it was near dark. He tells Mapel that all of the insulation in the house, including inside interior walls, would have to be removed and replaced, and the interior wall cavities inspected and damage repaired. He calls the damage severe. The lawsuit says he had a condition impacting his ability to see and had eye surgery afterward.
Sept. 30: CFP says the fair rental value is $5,173.97 per month and issued a check for $1,207.29 to cover seven days of rent. Later, without explanation, CFP cut the payment to $3,607.98, even though short-term rentals were essentially unavailable after the fire and thousands of residents were homeless, putting pressure on the rental market.
Oct. 15: Morris informs Mapel he has not yet prepared an estimate.
Nov. 5: Morris informs Mapel that he submitted his report. The estimate called for ozone odor treatment of the home for $3,650.79. The estimate did not provide for repairs to the home or replacement of contents. In Schaffer’s view, the estimate ignored actual loss and physical damage to the property and its contents.
Nov. 6: CFP adjuster Randy Hatcher wrote Mapel that after the $2,500 deductible, CFP would pay $1,150.79, enclosed the check and closed the file.
Nov. 10: Pride Public Adjusters, of Torrance, representing Mapel, writes to CFP citing inadequacies such as failure to address damaged insulation, failure to comply with professional guidelines and the state’s regulations, and includes a preliminary estimate for structure repair at $50,000.
Nov. 18: Hatcher with approval of CFP vice president of claims Estee Natale denies the claim.
The lawsuit says that mandatory dispute resolution in the CFP policy does not apply to a government-declared emergency, such as the CZU wildfire.
Dec. 14: Mapel submits preliminary estimate for contents remediation for $50,000.
Dec. 19: Kaizen Safety Solutions, which specializes in industrial hygiene and has experience inspecting fire-damaged homes, inspects Mapel’s home at her request.
Jan. 5, 2021: Hatcher sends another denial, approved by Natalee.
Then Mapel files a complaint with the state Department of Insurance.
Jan. 26: Hatcher’s response disputes Mapel’s claims.
At this time, more than a year (more than 5 months?) after the fire and smoke damage, the fully furnished home was still uninhabitable.
CFP did say it uses Zillow to determine fair rental value.
Jan. 29: Kaizen reports all major components of the property were damaged by wildfire , rending it uninhabitable.
Feb. 8: Mapel delivers Kaizen’s invoice for $26,738.74 for its inspection to CFP, seeking reimbursement, and demanding CFP reinvestigate the scope of the loss. She also delivers a complete inventory of contents she believe could be salvaged by cleaning and which she believed had to be replaced, seeking policy benefits.
Hatcher declines to reopen the file or make further payments.
July 19: Mapel writes to Natale, demanding her claim be reopened.
July 22: Natale declines to reopen the case.
The lawsuit, filed in August 2022, names the FAIR Plan’s officers: Annalise Jivan, president, retired, Victoria Roach, current president, John Boeder, vice president, underwriting, Estee Natale, vice president claims, Tammy Schwartz, vice president operations and underwriting, Elise Klein, general counsel, adjuster Randy Hatcher, and each member of the governing committee.
Mapel seeks general, special, economic and consequential damages, fees for attorneys, public adjuster and experts to recover policy benefits, prejudgment interest, cost of the lawsuit, and exemplary damages for fraud, oppression and malice.
She does not identify an amount but asks for relief “the Court finds just and proper.”
On Nov. 18, 2021, Mapel sold her home in Boulder Creek for $766,000. Her attorney says she has moved on from the litigation.
TOP PHOTO: The home in Boulder Creek rendered uninhabitable by the CZU wildfire; the owner sued the FAIR Plan over how her claim was handled.