SOURCE: Capital Insurance Group

May 01, 2008 18:26 ET

CIG Is First Insurer to Support State Ruling on Replacing Homes

MONTEREY, CA--(Marketwire - May 1, 2008) - Western region home insurer, CIG, today became the first carrier to publicly endorse the California Department of Insurance legal opinion supporting homeowners' rights to purchase an already built home at a new location using replacement cost insurance coverage.

"The decision of where to rebuild or replace a home that is lost in a fire is entirely up to the homeowner. CIG does not impose any penalty or try to influence the homeowner's choice to rebuild or purchase elsewhere," said Tom Scherff, Vice President of Claims for the Capital Insurance Group (CIG).

"CIG has paid full replacement cost benefits to Californians who chose to rebuild or replace their homes elsewhere, as far away as Florida," Scherff said. "Allowing homeowners to rebuild or buy where they wish has been CIG's practice for years -- prior to the consumer protection laws and regulations enacted after the October 2003 Southern California Wildfires."

California Insurance Commissioner Steve Poizner announced this week that the California Department of Insurance has issued a legal opinion supporting homeowners' rights to purchase an already built home at a new location using replacement cost insurance coverage and to replace a home in a new location using an extended or guaranteed replacement cost policy. The legal opinion, formally issued at the request of San Diego Councilmember Brian Maienschein, clarifies current California law. More than 1,800 homes were destroyed in Southern California last October by raging wildfires.

"But regardless of where they want to live, there's a real concern about what they'll be able to do next when the real cost of construction often exceeds the amount stated in the policy, in some cases by a very substantial sum," said Scherff. "CIG addresses that issue with our Think Twice coverage, a 200% extended replacement cost benefit. In other words, we pay up to twice the home coverage, if that's what it actually costs to rebuild or replace the dwelling. That gives people the peace of mind that they'll be able to rebuild a comparable home or use that amount to buy one."

CIG offers the following options to homeowners experiencing a total loss: (a) rebuild at the original site; (b) rebuild elsewhere; or (c) buy another home elsewhere (i.e., replace it).

To illustrate, take a CIG Homeowner's policy client with a policy for a $300,000 dwelling (coverage A). Assume that in assessing the value of the home after the loss, it is determined that it would cost $600,000 to rebuild. If the client decides on Option (a), CIG will pay up to $600,000, if that's what it actually costs to rebuild a comparable home. If the client chooses Option (b), CIG still pays up to $600,000, if that's what it actually costs to rebuild, no matter where the client chooses to build, including other states. If the policy client prefers Option (c), then CIG will pay the replacement cost up to $600,000, if that's what is actually spent on the purchase.

As of mid-April, the California Department of Insurance had received 237 justifiable complaints related to rebuilding issues following the October 2007 Southern California fires -- but none of those were about CIG. According to state statistics, 39,000 residential and commercial claims have been submitted to the insurance industry, including 1,866 for totally destroyed properties.

"CIG is proud of its reputation for providing homeowners with full compensation for covered losses, and for working with its policy clients to assure maximum benefits as they weigh their options about rebuilding or replacing their home," Scherff said.

More information about CIG Home Insurance is available at

About Capital Insurance Group

Capital Insurance Group® (CIG) is a 110-year-old property and casualty insurer serving the Western U.S. states of California, Oregon, Nevada, Arizona and Washington. The company is rated 'A' (Excellent) by A.M. Best, the independent financial monitor of the insurance industry.

CIG manages personal, business and agriculture risks underwritten by its four affiliates: California Capital Insurance Company, Eagle West Insurance Company, Nevada Capital Insurance Company, and Monterey Insurance Company. Types of policies may vary from state to state.

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