After every major California wildfire of the 21st century, the same crisis has repeated: Hundreds, even thousands of homes burn down, and most never go back up. In Paradise, the site of the deadliest and most destructive fire in state history, just 2,500 of the 11,000 homes that burned down seven years ago have been rebuilt. In the rural Santa Cruz Mountains, just 144 new homes have been built four years after a massive lightning-sparked blaze destroyed more than 700 dwellings. And in Grizzly Flats, a Sierra Nevada foothills community that lost 400 homes in the 2021 Caldor Fire, fewer than 30 homes have been built back. Many Grizzly families now live in trailers on the lots where their homes once stood.
Last year, Chronicle reporters Susie Neilson and Megan Fan Munce and visual journalist Brontë Wittpenn set out to understand why this crisis persists. After six months of meticulous reporting, they proved that a faulty algorithm is leaving homeowners with insurance policies that vastly underestimate the cost of rebuilding their homes — a phenomenon known as underinsurance. Other news outlets had touched on underinsurance, but none had probed the subject in-depth.
The Chronicle found that at least four of California’s largest insurers, including State Farm and Farmers Insurance Group, rely upon a single software program to determine virtually all of their customers’ coverage limits, or the amounts their policies will pay out if their homes are destroyed. The program, 360Value, routinely underestimates a home’s rebuild cost, often by hundreds of thousands of dollars. While insurers have repeatedly documented that the tool is broken, they have continued to use it without disclosing its flaws to homeowners.
Neilson, Munce and Wittpenn traveled across the state to interview dozens of wildfire survivors, pored through thousands of pages of court and internal insurance company documents, and consulted experts inside and outside the insurance industry. They purchased a subscription to the 360Value tool and conferred with insurance agents and adjusters to learn how to use it.
The result was a package that exposed what is causing underinsurance and explains how it impacts communities. Wittpenn’s short documentary delved into the story of Grizzly Flats, which was nearly completely destroyed by the Caldor Fire. Wittpenn documented how widespread underinsurance has stymied the community’s recovery, and drew parallels to a survivor of the Los Angeles wildfires navigating underinsurance in real time. The team also produced a solutions-oriented article advising homeowners on how to identify and address their own underinsurance.
The Chronicle’s ongoing reporting into underinsurance informed the rest of the newsroom’s coverage of California’s insurance crisis. Soon after the L.A. wildfires hit, Munce and Neilson published a rapid-response accountability story on the California FAIR Plan, the state’s insurer of last resort, and its history of delaying or underpaying claims, with deeper sourcing and greater authority than other outlets in the state.
