Forest fire destroys home
& fire insurance wasn't enough to cover the loss!

One hot August day in 1992, an Oregon man and his father saw there dreams literally go up in smoke when a forest fire destroyed their mountain retreat.

"The first question everyone always asks," says James, "is what about fire insurance?"

"We were seriously underinsured -- to the tune of over $900,000! The fire insurance money we did receive went into rebuilding our home, but it wasn't near enough."

The young writer's eyes were opened when he found that state and federal disaster aid programs are only available in areas formally declared disasters. Since the forest fire claimed only four homes in 10,000 acres, no disaster was declared and no additional aid was available in the form of low interest loans.

At first pleased to find that the company found responsible for starting the fire had an insurance policy of $1 million, he was angered to discover that both the state and federal governments would be fighting to get their share of that money to recoup firefighting costs.

"The government ultimately got 90 percent of that money, leaving very little for the real victims of the forest fire."

Here's the timeline of events involved in processing the fire and homeowners insurance claim and attempting to recover money from the responsible parties:

August 3, 1992 - Fire destroys home.
August 5, 1992 - Fire insurance claims adjuster sent to view property, declares it a total loss and initiates processing. Insured prepares lists of contents destroyed.
August 1992 - Proceeds for land and buildings part of policy paid up to the insurance policy limit.
September 1992 - Proceeds for "contents" part of the policy paid up to the homeowners policy limit.
September 1992 - Meetings with lawyers. Suit prepared and filed against well drilling company held responsible for starting fire.
September 1992 - Suit filed against insurance agent for "errors and omissions" in preparing original fire insurance application.
August 1995 - Well drilling company's liability insurance of $1 million was divided among a long list of victims claiming damages. Among those "victims" were the state and federal government who received 90 percent of the $1 million leaving very little for those who lost homes.
August 1995 - Settlement negotiated with homeowners insurance agent.

"They were three long years of waiting, and the lawyers received 33% of the proceeds from the claims against the well drilling company and the insurance agent," he says.

What did he learn?

"Make sure your homeowners insurance is adequate -- review your policies frequently, and always increase your coverages if you make any improvements to your home or buy anything expensive to keep inside it. Don't trust your insurance agent to do this for you."

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