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Wildfires expose underinsurance issues for spokane homeowners – Washington State Office

Wildfires expose underinsurance issues for spokane homeowners - Washington State Office

The Gray and Oregon Road wildfires in 2023 burned 20,000 acres, destroyed 366 homes, and highlighted widespread underinsurance among homeowners in Spokane, reported the Washington State Office of the Insurance Commissioner.

The fires led to 355 significant dwelling insurance claims, each with at least $10,000 in dwelling and personal property losses, according to the regulator, according to BestWire.

Among these, 244 paid out their full coverage limits, and 162 claims remain open, signaling coverage limits were often reached, noted Insurance Commissioner Mike Kreidler.

It’s a tragic loss for those affected, leaving many without full recovery after a life-altering event

Insurance Commissioner Mike Kreidler

Out of the 244 claims paid in full, 75 lacked extended replacement cost coverage, and nearly one-third of claimants with significant losses were dropped by their prior insurers.

Wildfires expose underinsurance issues for spokane homeowners - Washington State Office

The unique devastation of wildfires compared to typical house fires drives damages beyond policy limits, explained Aaron VanTuyl, public affairs specialist for the insurance department.

In a house fire, some structure—like a foundation—may remain, allowing for repairs. In a wildfire, total destruction leaves homeowners starting from scratch.

Contributing factors include gaps in homeowners’ understanding of their policies and failure to adjust coverage for rising building costs.

The underinsurance details emerged from a data call issued by the regulator earlier this year. Results showed 737 claims filed in relation to the fires, of which 644 resulted in payouts. Insurers issued a total of $212.18 mn in payments as of July 31, 2024, averaging $320,000 per claim.

The Gray Fire ignited near Medical Lake on August 18, rapidly spreading eastward and prompting widespread evacuations. Simultaneously, the Oregon Road Fire began near Elk, leading to similar emergency measures. Both fires resulted in two fatalities and significant property loss.

This underinsurance issue left numerous residents without sufficient funds to rebuild their homes. In response, federal assistance was made available to support recovery efforts.