Underinsured face financial uncertainty after losing homes in LA fires
Roberto Covarrubias and his family of six have lived in Altadena, California, for 10 years. Their American dream had four bedrooms, four bathrooms and 2,400 square feet.
But disaster struck when the Eaton Fire swept through their neighborhood. Virtually everything the family owned has settled into heaps of ash. Now they're facing a second disaster — a financial one.
"You're underinsured when it comes to the policy, there's clearly not going to be enough to make you whole again," said Alex Traslavina, a state-insured, independent insurance adjuster hired by fire victims to negotiate with insurance companies.
Although Covarrubias' homeowners insurance policy covers more than $1 million in losses, it won't be enough.
"Based off your numbers, it's anywhere between $500,000 to $1 million short," Traslavina said.
Traslavina estimates that many of the residents who lost their homes in the Los Angeles-area fires are underinsured, meaning the total cost of rebuilding will outpace what their insurance policies can afford them.
For some victims, the loss is both total and totally out of pocket. Nationally, 12% of American homeowners have no home insurance, according to the Insurance Information Institute. With premiums soaring, many of them dropped their coverage, rolled the dice and lost big in the disaster.
"I don't think most Americans understand that they're underinsured," said Dr. Jeremy Porter, who studies property values after natural disasters for nonprofit First Street. "I think they see it as something they have to have."
After Colorado's Marshall Fire in 2021, a roughly $2 billion disaster, an estimated three-fourths of victims discovered they were underinsured.
"If your home is completely destroyed, it's very difficult for most insurance policies to cover the complete rebuild of a property. So there's a second layer of revictimization," Porter said.
That's where Covarrubias finds himself. His savings now compete with a million dollars in uninsured losses. Still, he's determined to rebuild.
"We're going to rebuild here. The property is worth it. The place is worth it. If Rome was burned, how many times did they rebuild? We'll rebuild Altadena," Covarrubias said.
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