Before the fires in Southern California, you could see mile after mile of beautiful houses on wooded landscapes. But what you couldn't see was that many of the homes were uninsured  or underinsured.

More than a thousand structures have been destroyed and lives lost as wildfires sweep across parts of Los Angeles.

LA Wildfires

Virtually all of Robert Covarrubias' possessions have turned to ash due to the devastating impact of the Eaton Fire in Los Angeles. Covarrubias, who has resided in his Altadena home with his family for a decade, is now facing the harsh reality of underinsurance. Despite having a homeowner's policy that covers over $1 million, he is still falling short by as much as $1 million, leaving him grappling with significant financial troubles in addition to the physical losses he has endured. 

Covarrubias has sought the assistance of independent insurance adjuster Alex Traslavena to navigate the complexities of his insurance policy. Unfortunately, Traslavena had to break the news that the current coverage would not suffice to restore what was lost. With the costs of rebuilding rapidly increasing, the prospect of fully recovering seems increasingly unlikely for many victims of the fire. The broader issue of underinsurance is prevalent, as many residents, like Covarrubias, face significant out-of-pocket expenses to rebuild their lives.

In America, approximately 12 percent of homeowners lack any insurance, and rising premiums have led many to forgo proper coverage. Jeremy Porter, an analyst specializing in property values post-natural disasters, highlighted that similar issues arose in past disasters such as Colorado's Marshall Fire in 2021, where three-quarters of the victims discovered their policies were inadequate. Covarrubias remains resolute in his decision to rebuild on his property, despite his financial burdens, underscoring the challenge many face in securing their American dream.



Underinsured homeowners grapple with loss after LA fires

Virtually everything Robert Covarrubias owned has settled into heaps of ash. That's a refrigerator. His family of six has lived in Altadena for ten years. Their American dream had four bedrooms, four baths, 2,400 square feet. From three miles, you could see the flames coming our way. L.A.'s Eaton Fire swept through their neighborhood. It's going to be tough for us to make an inventory of everything we lost. Covarrubias, an I.T. executive, hopes Alex Traslavena can help. He's an independent insurance adjuster fire victims hire to negotiate with insurance companies. We listened as Traslavena delivered bad news. You're underinsured when it comes to the policy, and there's clearly not going to be enough to make you whole again. That's true even though Covarrubias' homeowner's policy covers more than $1 million in losses. Based off your numbers, it's anywhere between $500 to $1 million short. He's staring at a second disaster, a financial one. What are you going to do? I don't know yet. It's devastating. It hurts. Traslavena drove us through scarred and scared Altadena neighborhoods, scared, wondering how they'll ever afford to rebuild. The cost to rebuild, the materials outpacing the policies. So the idea that people are going to be made whole in many cases is a pipe dream. I don't know how families are going to be able to do it. For some victims, the loss is both total and totally out of pocket. Nationally, 12 percent of Americans have no home insurance. With premiums soaring, they drop their coverage and roll the dice, and in a disaster like this, loss big. I don't think most Americans understand that they're underinsured. I think most Americans see insurance as something they have to do. Jeremy Porter studies property values after natural disasters. Banks and insurance agencies rely on his data. Take 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 kind of re-victimization. That's where Robert Covarrubias now finds himself. His savings now compete with a million dollars in uninsured losses. Are you determined to rebuild? Yeah. Here? Yeah. The property's worth it. The place is worth it. It's his assurance to his family. His insurance makes that more complicated. For Eye on America, Mark Strassman in Altadena, California.

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LA Wildfires