Some brushfire victims find they're under-insured; cost of rebuilding shocks homeless Glendale residents.

Some brushfire victims find they're under-insured

Cost of rebuilding shocks homeless Glendale residents

Dan Leimeter and his wife Barbara lost everything in the Glendale fire late last month that authorities say was deliberately set.

Their home, which together with the land was valued at $450,000, was one of 46 destroyed, along with another 20 that were damaged and may not be salvageable.

The Leimeters, both 49 years old, had lived in the Gladys Drive home for 12 years, but they may be one of the lucky victims because their insurance will cover most of their losses, Leitmeter said.

The couple had about $160,000 in coverage on their home and $80,000 for its contents, so along with a loan from the federal Small Business Administration, the couple should be able to rebuild without too much financial hardship, said Leitmeter, a supervisor at Todd-Ao sound studios in Hollywood.

"We probably should have had more coverage," he said. "We probably should have had coverage of $320,000 to keep pace with the rebuilding costs but we were always told the land was more valuable than the structure.

"The cost of building has gone way up very fast while our coverage has gone up more slowly and not as much," he added.

James Farkas, 63, said his land and home, which was also destroyed in the fire, were valued at $350,000 but he only had $100,000 in coverage, along with another $25,000 for its contents.

The manufacturing engineer had lived in the home since 1970 and plans to rebuild, with the money from his insurance and a supplemental loan from the SBA.

"I thought I was covered," he said. "I thought I had enough insurance and I figured that if anything, it would be an earthquake, not a fire."

Farkas said he may use the $25,000 in coverage for contents to pay off the mortgage on the destroyed home and then apply for an SBA loan to help rebuild the house on the same site.

The main problem facing victims of the fire is not a lack of insurance but insufficient coverage, said state and federal authorities assisting the homeowners.

They estimate that total losses could reach $50 million, and a good portion of that is probably not covered under the victims' insurance policies.

The basic course of action for victims is to determine the extent of their coverage and then apply for additional financing through the SBA, which is available because the locate has been declared a major disaster area.

The SBA provides loans up to $100,000 for real estate and $20,000 for personal property, at 4 percent or 8 percent interest, depending on the applicant's ability to recover from the disaster on their own and on whether they could obtain credit elsewhere.

Susan Stable, an SBA representative, said some of the victims operated businesses out of their homes and the agency has also been taking applications for loans to cover those losses as well.

She said business losses could include destruction or damage of company records, or business equipment like a computer or facsimile machine.

The immediate concern of the victims has been where to stay and clothing. Those items should be covered under the standard homeowners' policy, said Thomas Beauchamp, an agent in the Glendale office of Farmers Insurance Group.

The loss-of-use clause in a homeowners' policy should provide for housing, clothing and other living expenses up to 30 percent of the value of the policy, he said.

He said after such a disaster, victims should salvage what is left of their homes, secure it from vandals and make sure all the utilities have been disconnected. Another concern should be notifying the county tax assessor.

A representative of the Los Angeles County Tax Assessor's office said that when a home is destroyed, it is taken off the tax rolls but the victim must continue to pay a levy on the land. Homes that have been damaged will be reassessed to reflect the lower value, he added.

Property owners whose homes were damaged are now facing the question of whether they can be salvaged or whether they will have to be torn down. That determination is made by the permit services department of Glendale, said Hsiao-Bai Wu, a senior civil engineer in the department.

Factors in whether a house can be salvaged include the extent of the damage to the foundation, he said.

The most likely conflicts in such a disaster are between insurance carriers and homeowners over the extent of the coverage. Those disputes are mediated by the California Department of Insurance, said David Langenbacher, chief of the underwriting bureau.

Kyle Hording, an attorney for MLS Settlement, a Los Angeles firm that handles personal injury cases, said she has talked to at least one victim who has been informed by the insurance carrier that the loss would not be covered because the home was in a "brush zone."