How Good Is Your Neighbor?

Builders and insurance companies are in the spotlight after major natural disasters.  

On December 30, 2021, a sudden and devastating wildfire, driven by freakish winds sometimes exceeding 100 miles per hour, swept through two communities in Boulder County, Colo. In a few hours, almost 1,100 homes were completely consumed. At least one elderly homeowner lost her life in the fire and, as of this writing, another is still missing.

As cruel as the disaster proved to be, the families had no way of knowing that their direct losses due to the fire would be only the first of their miseries. The fire also left hundreds of families without shelter when a wicked snowstorm swept through the same area a day later, bringing freezing temperatures and dumping inches of snow.

The families’ communities are in a housing market that is already stretched to the breaking point, with demand outpacing supply in existing and new construction. Because of that, and the all-too-familiar stresses on the building industry affecting every region of the country, many owners find themselves months, if not years, away from opportunities to rebuild.

To magnify the problem, the communities had recently adopted updated building and energy codes that were set to go into effect earlier this year. Certain builders, and the home builders association trade group with jurisdiction in the fire area, shamefully used the tragedy to leverage their anti-regulation agenda. 

They quoted outrageously inflated cost increases related to the new codes. In many instances, they threw out numbers intended to shock and horrify the fire victims, or perhaps to establish a false pricing notion that could set the stage for price gouging of future customers desperate to rebuild their homes and their beloved neighborhoods.

Many of those homes were built years, even decades, prior to the fire. The owners had no reasonable way of knowing how much the costs to rebuild have escalated during that time. Even homes that were built in the last year or so would be impossible to rebuild for the same dollar figures today due to recent dramatic increases in the costs of materials and labor.

As if this reality were not enough, the vast majority of those attempting to file insurance claims quickly found out that they were underinsured by hundreds of thousands of dollars or more. Many were stunned to learn that even though their trusted insurance agents had repeatedly assured them they were adequately covered, nothing could be further from the truth. 

Insurance is a highly competitive industry. Just count the number of insurance ads on television the next time you tune in. There are many agencies vying for the same piece of business in markets across the country. Sadly, most consumers are so price sensitive that they will accept the information they’re given, even if they aren’t completely convinced that it’s accurate. It just has to sound good.

The state of Colorado is looking into the situation. It remains to be seen whether any accountability will fall on the companies providing the policies or the agencies representing them. 

Meanwhile, I received a phone call last week from the agency that holds the policy for our home. It wanted to schedule a call to review my coverage. We agreed to speak this morning, but it is now afternoon and I have heard from no one. How does the song go, “Since my phone still ain’t ringin’, I assume it still ain’t you.” Somehow, those “good hands” and my “good neighbor” don’t have me feeling so good.