Anaheim Hills, Yorba Linda fires are going to test the insurance companies

[SoCalDem]

here's why..

Those houses have HUGE mortgages..probably when those houses were built, the market was booming, and I'm betting that most people who live there , have them insured for "replacement cost"... The former appraisals are no doubt BEFORE those houses lost half their "value".. Bank may be still "owed" a million-5, but the insurers may only be willing to pay 600K (or less)..

[kestrel91316]

1. 265 housing units destroyed so far. This is a HUGE fire.

"Housing units" includes houses, apartments, condos.

[Billy Burnett]

2. Maybe the insurance companies could ask for the deed prior to payment.

Who knows who (or how many) actually owns the note.

[rvablue]

3. And don't forget the multi millionaire dollar Montecito mansions on the list

Yesss....I agree, this is going to be very interesting.

And what will Ahnuld do...how can the state step in to help ressurect these expensive homes of the rich when so many working class are suffering.

((Just to let you know, I'm not putting down the suffering of those who have lost homes. It is horrible no matter how rich or poor you are. Just looking at through the filter of the harsh economic realties right now. That's all.........))

[Missouri Girl]

4. The mortgage is irrelevant in a replacement cost homeowners' insurance policy.

Replacement cost means that the insurance company will pay to have the home re-built to what it was before the fire. The mortgage amount owed never comes into the conversation. The home will be rebuilt and the bank still has a property securing the mortgage. Market values or appraisals are not what insurance companies insure - those all include the value of the land, which is uninsurable (because land cannot be "damaged" by fire, lightning, etc.)

Where there will be problems is if someone has an ACV or actual cash value policy. That would adjust the claim based upon the ACV at the time of the loss.

However, there are also valued policy laws in some states that would insure that the homeowner is paid the policy limits they purchased - the insurance company cannot deny the property was worth less at the time of the loss than the insured value. I don't know what California's laws are, but in Missouri, we have valued policy laws on the books to protect consumers.

http://www.ahtins.com/glossary/vvv/v010.htm
http://research.lawyers.com/glossary/valued-policy-law.html

The problems the insurance companies will have is handling a widespread catastrophe like this. This will test their claims staff and their claims reserves. Homeowners rates will skyrocket within the next few months to account for these losses.

[cherokeeprogressive]

5. On Fox 11 they just showed a completely untouched For Sale sign in front of

a smoldering pile of ashes that used to be a house in Yorba Linda.