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Flood damage raises alarm over California’s upcoming ‘catastrophe insurance gap’

Dakota Rivas was getting out of the shower the evening of Jan. 4 when she heard a loud roar behind the house her family rents in West Hills. A fast-moving mudslide had started on the rocky hillside behind the property, submerging a clogged drain, backing up against the house and devastating the yard where her children and dogs play.

“It sounded like thunder or something big,” the 32-year-old said, assessing the damage after the rain finally stopped last week. “I went to check what it was and saw a bunch of mud and water running down our driveway.”

She pointed to a waterfall of water still flowing down the hillside.

“This waterfall behind our house,” she said, “didn’t exist at all before. »

For many Southern Californians, this is the new normal. Homes once prized for their hillside views and apartment complexes on low-lying urban streets are increasingly threatened by severe flooding, mudslides and high winds. Wildfires and earthquakes have long been a focus of concern, but the aftermath of wet storms is only now beginning to generate similar levels of alarm.

The Rivases had renters insurance when they lived in a house a few doors down. But when they moved in November, they couldn’t get an insurance policy because of the location. The so-called “catastrophe insurance gap” has become an increasingly serious concern in recent years. Even those who have insurance but live in unsafe locations are often unable to obtain sufficient insurance policies to protect their homes and property.

Maleeyah looks up at the hill behind her house.

(Mel Melcon / Los Angeles Times)

Rates for homeowners and renters with flood insurance policies are lagging as more of Southern California has become subject to extreme weather brought on by climate change. In the eight Southern California counties that were under a state of emergency during the recent storm, only 52,820 homes and businesses were covered by a flood insurance policy, according to the National Flood Insurance Program.

Homeowners, renters and insurers have been slow to catch up with climate change, leaving Southland families with little financial protection from wind and water on their doorstep.

“They don’t offer rental insurance in that area anymore, mainly because of the fires,” Rivas said. “We’ve never had a flood here before. It just wasn’t something anyone thought about.

***

The mud continued to slide for several days. As the power took over that first night, Rivas and her husband, Walter, 42, borrowed shovels from their neighbors and dug through the flowing earth for hours, trying in vain to clear a channel around their home .

“We were just fighting against Mother Nature and we were at her mercy,” Walter said. “And we were losing.”

Workers clear mud from the driveway of the modular home the Rivas family rents in West Hills, which was damaged by a mudslide.

Workers remove mud from Rivas’ alley.

(Mel Melcon / Los Angeles Times)

Finally, the Rivases – who have a son, Isaac, 10 years old; a daughter, Maleeyah, 9; a Shih Tzu named Polly Pocket; and a chihuahua named Mia – got lucky. Their efforts – along with those of the firefighters who cleared the blocked drain the next day – paid off and their two-bedroom house was damaged but standing. But their well-kept yard and many of their personal belongings were destroyed.

The couple hopes their property management company will quickly repair the house and pay to replace some of their belongings. Last week Dakota started a GoFundMe campaign that fell well short of its $3,000 goal. She wishes she had insurance to cover rising costs following the storm.

Even if the Rivas clan had managed to obtain insurance, their plan likely wouldn’t have covered much of what they lost, because most standard renters insurance policies don’t cover flood damage .

It’s the same for most owners. For residents of certain high flood risk areas who have mortgages, flood insurance is required.

For people whose homes are in thousands of federally designated flood zones across the country, the U.S. government offers policies through the National Flood Insurance Program. But payments under the program are capped at $250,000 for the structure of a typical home and $100,000 for its contents. Beyond that, policyholders are left to their own devices.

Nationally, about one-fifth of insurance claims for flood losses are filed outside designated flood zones, according to Janet Ruiz, a spokeswoman for the Insurance Information Institute, a national industry group. In other words, areas that are not typically known for flooding may still be at risk of significant damage. In Los Angeles County, according to Ruiz’s group, there are more than 3.5 million housing units and fewer than 20,000 flood insurance policies.

A family is pictured next to their home which was damaged by a landslide caused by recent rains.

The Rivases at home after the storm.

(Mel Melcon / Los Angeles Times)

This means that a few days of heavy rain can cause economic devastation.

“Most insurance policies, unless you have flood insurance, don’t cover groundwater,” said Mark Eaton of MSB Disaster Recovery in Agoura Hills. “Right now we have people whose basements have water in them and they’re overwhelming their pumping systems, but it’s not covered.”

***

At the start of last week’s storms, water began leaking through the ceiling of an apartment in a sprawling Santa Clarita apartment complex, and it continued to seep for three days. On Thursday, the paint on the living room ceiling was blistered and cracked. A dark blue carpet was rolled up on one side of the apartment and much of the furniture was wrapped in plastic.

Joel Moss, director of business development at Paul Davis Restoration, a national water, mold and fire cleanup and restoration company, was called by the homeowner to assist.

Joel Moss, of Paul Davis Restoration in Santa Clarita, stands in a city apartment damaged by rain last week.

Joel Moss, business development manager at Paul Davis Restoration in Santa Clarita, in an apartment damaged by rain last week.

(Connor Sheets/Los Angeles Times)

“There was easily that much water on the floor,” Moss said, spreading two fingers a few inches apart while pointing at the living room’s white tile floor. “It was raining by the front door.”

Despite the hum of an industrial-strength air purifier and dehumidifier, Moss said tenants had to vacate the unit quickly, leaving food and dishes on the counter. It will likely be weeks before the apartment is habitable, he said, and in the meantime, its occupants need a place to stay.

Additional living expenses are covered by many homeowners and renters insurance policies, but not usually by flood insurance policies. Many people whose homes are flooded have to pay out of pocket for a hotel or Airbnb.

The cost of temporary housing is just one of many factors that renters and landlords can consider when deciding what type of insurance to purchase. Insurers offer a range of coverage options for damage suffered in almost any form of natural devastation, from hurricanes to earthquakes.

But mudslides are a type of disaster that is not usually included in even the most expensive and costly insurance policies. Entire hillsides of Southern California have disappeared in recent years, and last week’s storm triggered several severe flows and hundreds of smaller ones. Ruiz said mudslide protection is typically sold separately, under a “difference in conditions” policy.

“Not many brokers or insurers sell it,” she said. “And it’s expensive if they do it.”

***

The end of a catastrophic event is only the beginning when it comes to insurance claims.

Insurance companies have an incentive to deny or minimize payments, according to Omar Ochoa, a Texas attorney who specializes in property damage claims. He said businesses are moving toward policies that give them more ways to avoid losses, which means owners have to defend themselves.

“People don’t have to accept a bad claims decision,” Mr. Ochoa said. “To some extent, the insurance industry is banking on people not complaining or challenging their claims decisions. »

Ochoa suggests policyholders consult an attorney if they believe they are being undervalued by a claims adjuster. Ruiz said customers can also go directly to their insurers and negotiate with the claims adjuster.

Walter sees the damage.

Walter sees the damage.

(Mel Melcon / Los Angeles Times)

“It’s normal,” Ruiz said. “This often surprises people who have claims that they think are too weak.”

It’s impossible to insure all the risks for your home, Ruiz added, so it’s a matter of weighing the risk of a particular calamity against the cost of a monthly premium. For Southern Californians who manage to find and afford coverage, that math could tip in favor of flood insurance after last week’s storms.

“We were so focused on wildfires and drought that it was hard to imagine flooding, so a lot of Californians didn’t have a flood policy,” Ruiz said. “We must reverse the trend.”

Times reporter Sam Dean contributed to this report.

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