California Counties Feeling Winter Blues in the Aftermath of Storms

The recent winter storms that wreaked havoc over the California landscape have resulted in several deaths, injuries, destroyed homes and property, and over 15,000 insurance claims–prompting Governor Arnold Schwarzenegger to declare a state of emergency in seven counties.

The combination of mudslides, heavy snowfall, and flooding caused more than $150 million in damage to roads, homes, and other property, according to the Los Angeles Times.

Hardest hit was the coastal village of La Conchita in Los Angeles County, which suffered from a massive mudslide Jan. 10, killing 10 people and destroying 13 homes.

“We’ve tallied 15,400 homeowners and flood insurance claims filed to date,” said Candysse Miller, executive director of the Insurance Information Institute of California. “That number changes daily. We do not have a dollar figure attached yet.”

Despite the approximate 15,000 claims that have been reported thus far, some homeowners are finding that their policies do not provide coverage for damage resulting from mudslides or landslides, and the issue is fast becoming a point of contention between agents and homeowners. Homeowners that do have separate flood insurance policies are debating whether or not the damage was caused by mudslides, or if the catastrophe can be classified as a landslide, thus rendering it covered by a flood policy.

Further debate was sparked when people–including Insurance Commissioner John Garamendi–began using the term mudflow to describe the disaster. Mudflows are described as primarily water with dirt and mud particles in it, according to Peter Moraga, communications specialist for the IINC. Because it is more liquid than solid, mudflows would be covered by flood insurance.

Insurance Services Office spokesman Chris Guidette said that the company does not yet have any firm loss numbers for insured losses, since claims are not coming in as quickly as they usually do during disasters. Miller said that the storm has been declared a catastrophe by the ISO, and insured losses could easily exceed the $25 million catastrophe threshold.

The Times also reported that Governor Schwarzenegger declared a state of emergency in seven counties, including Los Angeles, Ventura, Kern, Orange, Riverside, San Bernardino, San Diego and Santa Barbara. The declaration will make residents affected by the storms eligible for financial assistance from the state in the form of low-interest loans which can be used to rebuild or replace property not covered under insurance.

Residents and government officials are still waiting for word from the Federal Emergency Management Agency as to whether or not the area will be declared a national catastrophe, which would release millions of dollars in funds to help both homeowners and the state rebuild.

“The state of California has asked the Federal Emergency Management Agency to join with them and the various counties that the government proclaimed disaster areas in California,” said James Shebl, public affairs officer for FEMA. “We have joined with them to do what we call a preliminary damage assessment, and until that assessment is completed and analyzed, a recommendation to the President for a declaration cannot be made.”

FEMA typically provides aid in two forms–one is public assistance, which covers infrastructure (public buildings, roadways, parks, etc.) that is not covered by other federal agencies. FEMA would pay up to 75 percent of eligible costs. The other part is individual assistance, which is for homeowners who have damage directly related to the event.

“This is not going to create any long term effects,” Moraga said. “The insurance industry in California, despite any other disasters, especially the fires two years ago, is still in very good condition.”

“We don’t expect California’s winter storms to have a dramatic impact on the availability of insurance,” Miller added. “Nonetheless, it is important to note that 2004 was perhaps an unprecedented year for natural disasters not only in the US, but globally.”