Californian Spends $600,000 Rebuilding Home After Insurer Cancels Policy

One woman in California is searching for answers after her homeowner insurance policy left her uninsured for a $600,000 house that burned down during a wildfire.

California homeowners have been facing some unique challenges as insurance companies begin to abandon the state amid high housing costs and the frequent occurrence of wildfires and other natural disasters.

Amber Bush, a 44-year-old living in Redding, remembers the day she saw her home burn down in 2018. The home was destroyed by the Carr wildfire, which saw more than 110,000 acres devastated in the state.

Bush said the home was totally lost, with the entire property, including all the plants and trees around her house, turned to ash.

“It looked like a moonscape and smelled like melted rubber. It burned your eyes and stung the throat,” Bush told Newsweek.

She learned of her home’s fate after reading an article on the front page of The Sacramento Bee. Under a picture of her home burning down were the words “Last stand at Ridge Drive.”

Bush’s disabled daughter was 3 years old when their home burned down, while Bush’s husband also just had his gallbladder removed and was unable to help at the time.

“I panicked and couldn’t breathe,” Bush said.

The family found themselves living in a hotel for a month before finding a rental in Redding.

At the time her home was destroyed, Bush was enrolled in a Farmers Insurance policy, but the nightmare soon continued after she got in contact with the company.

She said Farmers Insurance had terminated her policy because they said her contractor never completed her home.

“The cancellation notice stated that my policy was being cancelled because my home was still under construction,” Bush told Newsweek.

She ended up suing Farmers Insurance after her house burned down because the insurance agent didn’t have the correct information, ultimately leading her to be underinsured. While the case was settled out of court in March of last year, Bush still sees the impact of the insurance fiasco on her life every day.

“The amount of the settlement after nearly five years of fighting with all the attorney fees and expert witness costs left me without enough to complete the home,” Bush said.

Nine months after the case was settled, Bush’s policy was cancelled yet again due to her home still being under construction.

“My mortgage company had to put insurance on my home because no other insurance companies will cover my partially-built home,” Bush said. “The insurance from the mortgage company is less than adequate and will only cover the mortgage company for their losses, not any of the costs I have put into rebuilding my home.”

Altogether, Bush has spent more than $600,000 building her now uninsured home, so the stakes are high.

“If anything happens to it, the mortgage company gets their money and I get nothing but a plot of land,” she said.

Bush said all she wants now is for her home to be finished and for the insurance and construction company to be held accountable.

“These multi-billion-dollar companies get a tiny hand slap for ruining people’s lives, even disabled people and disabled children,” she said. “There’s no accountability for these companies. They are basically above the law unless you can afford an attorney.”

Newsweek reached out to Farmers Insurance for comment via email.

Since the fire, Bush said her family has moved a total of four times. They now live in a travel trailer next to the partially-built home. Still, the family is required to go to a hotel every week because the city of Redding didn’t provide them an exemption on its “no camping” ordinance.

And after her contractor performed unpermitted work on the property, Bush said the contractors have sued in an attempt to take her $600,000 in investment property. While Bush filed a claim on her homeowners’ insurance for liability coverage to pay for an attorney to protect the home from the contractors, the process is still in review.

In the meantime, Bush said she is left without an attorney and will probably lose her home without any representation.

What Homeowners Should Know

According to experts, insurance companies frequently deny coverage if the carrier or policy written wasn’t meant for the occupancy type or state of the home, which could have happened because the Bush’s home was under construction.

Often, “dwelling under construction” coverage comes via an additional endorsement, and endorsements can be some of the least understood aspects of insurance policy.

“Normally, a home under major construction or renovation is not provided the same coverage under the basic policy of insurance so the dwelling under construction would have been a necessity,” Alan Chang, the founder and president of Vested Title & Escrow, told Newsweek.

Louisiana-based attorney Scott L. Smith said insurance companies have largely failed homeowners in areas of widespread natural disasters, like California’s wildfires or the Gulf Coast’s hurricane damage. Because insurers wouldn’t be able to pay out without going bankrupt, many companies were taken over by the state department of insurance. Once those funds were distributed, homeowners received only a fraction of the costs to rebuild, he said.

“This is another heartbreaking crack that people can fall into,” Smith, who runs DebtReduction101.com, told Newsweek. “The home insurance company is within their contractual rights to discontinue the insurance policy if repairs are not made within a reasonable period of time. You just can’t insure a broken home.”

Carriers sometimes will look at these situations as misrepresented information, William Lemmon, the agency principal at Los Angeles Broadway Insurance Services, told Newsweek.

“There is also the possibility that, if construction was halted without the intention of completion, the insurer may have seen the site as being hazardous,” Lemmon said.

Alyson Dutch, another California homeowner, has struggled for nearly three decades to buy insurance on her Malibu home because it’s considered a “high risk” area, she said.

The only option for many is the California Fair Plan. The state-subsidized option, while providing some support for fire and earthquake damage, often leaves many frustrated when it comes time to rely on the coverage for repairs, though.

“It’s crap insurance and barely covers anything,” Dutch told Newsweek. “This is the reason why so many houses in Malibu that have burned in fires, or slid in rains that followed, had to leave the state and their properties remain in shambles.”

For other homeowners, you can typically avoid finding out your coverage doesn’t exist after an accident by keeping in regular contact with your insurer.

“Have a personal relationship with your insurance broker or agent. Instead of some big company, you are now dealing with an individual that you can talk to about your overall insurance coverage,” Sammy Lyon, an associate broker at Dow Capital, told Newsweek. “Unfortunately, insurance companies are trying anything they can do to deny coverage right now, but having a personal relationship with your insurance agent can at least mitigate some of the loopholes companies are using to leave people uninsured.”