The Marquis family had spent nearly three years restoring a 100-year-old home on Main Street in scenic Napa Valley, CA. Both Bret and Lorraine worked during the day, but they spent their evenings and weekends remaking the home themselves. The couple had also bought earthquake insurance for their home at the start of the renovation project, offering a $46,000 deductible with a $385,000 limit.
On August 24, 2014, an earthquake severely damaged much of the work they had done less than two weeks after they had finished! The plaster walls were destroyed, the kitchen was left in pieces, and the foundation was severely destroyed and sank more than 4 inches. Despite the setback, the Marquis were confident that the damage would be considered obvious by the insurance adjusters.
Instead, State Farm (who sells the insurance) and California Earthquake Authority (who provides coverage) offered them a measly $20,000 to repair the plaster walls—an amount that barely covered the expense of one room. The CEA and State Farm denied their claim regarding the foundation damage, stating that the damage was caused by settlement, not the earthquake.
However, there was evidence that the quake caused the foundation damage. Weeks prior to the quake, Bret and Lorraine had engineers inspect their home, and they noted that it had sunk by 1.5 inches—far less than the 4.5 that State Farm had measured after the quake.
The claims process carried on with more inspections and reports. Eventually, the CEA revised its initial settlement: it would offer the Marquis $83,000 to plaster the walls. Subtracting the deductible, the Marquis received $37,000 for their walls, as well as $20,000 for moving expenses, hotel expenses, and other items. Later, Lorraine did the calculations for what it would have cost to replace the foundation and repair the walls—it would have still not exceeded their policy’s limit.
In the end, Bret and Lorraine were tired of fighting. They had wanted the insurance company to do what it had promised—pay for damages in the event of a covered emergency. That’s what all insurance companies promise. Instead, the couple never received close to what the policy promised. The insurers, despite the evidence and the validity of the claim, kept the Marquis waiting and wore them down until they settled for a tenth of what they should have gotten.
The Marquis family ended up pouring $300,000 of their own savings to repair the damage. Their dreams of retiring early? Gone. While their home is stronger than ever, Lorraine has quit earthquake coverage for good. Her reasoning seems understandable, given her experience: why pour thousands of dollars into coverage when companies won’t pay for valid claims? Now that it would take a catastrophic quake to destroy her home, Lorraine knows that if her home is damaged in an earthquake, her insurance would be the least of her worries.