Aug. 17--Homeowners in the Ruidoso area were urged Thursday to understand their insurance policies. And the message for those with losses as a result of the Little Bear Fire was to contact the state's Insurance Division if they have any problems or questions.

Superintendent of Insurance John Franchini said knowledge and the right help are important.

"I realized in talking to some of my friends and homeowners in your area that the fire was a lot more severe than the government had been publicizing," Franchini said during a public meeting at Ruidoso Village Hall. "And what we did the very next day, because I realized already that there was at least $5 million in losses of people that I knew whose houses were burnt, I had John Gaherty, who's our Catastrophe Bureau chief, declare an insurance disaster. What that does, it immediately gives the insurance companies who have policies in that area, they immediately have to send a claim team in, a disaster team in. So on the 14th (June 14), we did this."

The June 14 order requires insurers to settle claims by Sept. 14 or provide a report detailing the reasons for not settling.

Claims so far

A recent report from the majority of insurers in the area to the Insurance Division indicated 502 policyholders have filed claims.

"Now remember, this is only policyholders that have got insurance policies in the state of New Mexico," Franchini said. "People that have policies in Oklahoma and Texas or Arizona that have secondary

dwellings are reporting those separately to their insurance carriers in their states."

Franchini said of the 502 claims, 485 have been homeowners' claims. He expected the total number of claims to grow.

"We already know they have set up reserves of $34.5 million for that."

There also are 16 automobile claims for about $100,000. And two of the commercial claims will surpass $400,000. The current estimated property damage is about $35 million.

Franchini said the number of building claims was higher than the number of structures destroyed because some homes suffered smoke damage. And the 502 overall claims only represent the top 15 insurance companies that have reported to the Insurance Division.

"A lot of this is a moving target because additional living expenses could go up," Franchini said. "The values could change. A lot of people are complaining that they felt like the claims person didn't pay them enough for their personal property as a down payment. What you do is you buy what you need and you tell them what you think it's going to be and they give you a percentage of that. These policies are at replacement cost. You get new for old. There's no squabbling about what it cost. You go buy it and they pay you for it."

But instead of replacement cost, policyholders who do not rebuild receive a settlement with a depreciated value.

Franchini said there has only been one real complaint to the Insurance Division coming out of the destruction from the Little Bear Fire. He urged those who feel they're not getting a fair shake from their insurer to contact the New Mexico Public Regulation Commission's Insurance Division.

Read your policy

Ruidoso Valley Chamber of Commerce Executive Director Becky Brooks told Franchini that there are some people who are unhappy with their coverage.

"There are people who don't always read their policies," Brooks said, adding she is among that group. "Some who never read their policy now have found out there were things on their property that were totally not insured. Things like secondary homes on their property. They haven't known who to contact."

Franchini again said those people need to contact the Insurance Division.

Lincoln County Commissioner Kathryn Minter said she is recommending residents in her Commission District 4 read their policies.

"Because you need to know what is replacement value? What is depreciation?"

Franchini agreed and added policyholders who have not reviewed their policies in years could be in trouble. He said a home is typically a person's biggest asset and should be treated like "a nest egg."

Where and what to rebuild

Minter said some people who lost their large homes are finding it difficult to downsize.

"Some people had a five-bedroom house. Now they want a two-bedroom house. And they're (insurers) are saying you have to build the same house on that site."

Minter specifically noted one of her constituents said her agent stated they could not simply replace their destroyed home with a smaller, already existing home.

"That's not true," Franchini said. "He bought the policy and wants to replace the house somewhere else. He gets to."

Kathy Yeager, with High Country Agency, an independent insurance company in Ruidoso, offered an example to back up Franchini's response.

"This literally happened with a 4,000-square-foot house," Yeager said. "The insurance company figured out replacement cost of that house would be close to $600,000. It was a 30-year-old house. They were depreciating it down by 30 percent so the net would have been approximately $420,000. They can cash out $420,000. That's their money. They can take that money and buy a $200,000 house and keep the rest. That's what these people did."

Franchini said that can be done. He noted however that those who "cash out" will receive a depreciated amount. But if the couple had decided to rebuild at the same location, the insurer would fork over the $600,000 as the replacement value.

"And you can always negotiate with the company," he added.

Bart Garrison, who is also with the High Country Agency, said the standard ISO (Insurance Services Office) does not require rebuilding on the same property.

What's inside

On contents coverage, Brooks questioned how an insurer determines the value of personal property that cannot be replaced.

Franchini said a policyholder needs to prove they owned the item and what its market value was.

"You say, well I had a grandfather clock. It must be worth $10,000 but I don't know anything else about it. You're probably not going to get $10,000 for that because you don't have any other proof."

Garrison said the insurance company has a way to determine the value of items like antiques and will pay what it was worth, but not replacement cost.

Franchini said every six months an inventory of personal property should be updated and kept in a secure location away from the home. Photos should also be included. The insurance superintendent noted policies can include "floaters" for items such as fine art and jewelry.

Lessons being learned

Brooks said unfortunately some people are learning a lesson after the fire.

Franchini said nevertheless there can be relief for those with insurance issues.

"All these companies in these disaster times are very, very interested in working with the people that had devastating losses. They're willing to work with them. And if they're not, the Department of Insurance is willing to get them to start a dialogue."

The state's insurance superintendent said the only time his office will not help is when someone has gone to an attorney.

"When you start to sue, we no longer have the ability to intervene because they have chosen an attorney to handle their legal affairs and now I have no power to help," Franchini said. "Try me first because I'm so much cheaper. The superintendent of insurance is given a lot of authority and responsibility to help the public. You pay your taxes and I respond to you."

Noting the complicated nature of homeowners insurance, Minter said there is now a wake-up call to those who were not burned.

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