Fire Victims Say Insurance Companies Misled Them : Disaster: Residents at a get-together marking six months since the Altadena blaze say they are having trouble getting enough money to rebuild.

Homeowners burned out by the Altadena fire commemorated six months since the blaze with a barbecue Sunday at the site of a razed home and a workshop addressing insurance problems.

Fire victims mingled with state insurance officials, munching on charbroiled chicken and ribs and voicing complaints that their insurance companies had misled them about their coverage and now aren’t offering enough money to rebuild.

Most of the complaints were directed against California Fair Plan, the insurance industry’s pool for homeowners in high-risk areas.

Frank and Zlata Kordic hosted the event at the site of their former home in the Kinneloa Mesa area.

Recovering from the fire has been a slow ordeal for the couple, who learned too late that they were covered for less than half the value of their $600,000 house. Their Fair Plan policy covered $257,000, and Frank Kordic said their requests for higher coverage were denied. Instead, they had purchased supplemental insurance through Safeco to cover the difference.

But after the fire, they found that the Safeco policy didn’t insure for fire damage. A cryptic line in the policy, called an S-option, voided fire coverage. Although the policy explicitly stated that it did not cover earthquakes, nowhere did it say fires were not covered.

Stacy Sproull of Kinneloa Estates found the same hitch in her insurance. A Fair Plan policy covered $210,000--about a third of the value of her home, she said, and the maximum her agent said she was eligible for. An additional policy with Safeco was to have covered another $265,000, she said, but the S-option canceled that.

Safeco has since agreed to pay the $265,000, Sproull said, but has not paid the living expenses her policy entitles her to.

Cindy Ossias, an attorney with the California Insurance Commission, said these complaints are typical of ones she has been hearing about Fair Plan. Homes were underinsured, policies covered only actual cash value and not replacement cost, and the responsibility for upgrading policies was not clearly defined.

Fair Plan spokesman Mike Harris, who did not attend the barbecue, said in an interview afterward that the company clearly labels documents with a sticker proclaiming “it is solely your responsibility to make sure your coverage is adequate.”

And in 1993, he said, the company sent out fliers notifying policyholders that replacement cost coverage was newly available.

California Fair Plan does not do appraisals, have agents or set policy limits. Homeowners can buy the insurance directly, or go through an insurance company agent or an independent broker. The plan is intended as the insurance of last resort, after applications for regular policies are denied. Too often, though, Ossias said, agents write a Fair Plan policy after a first application is rejected.

About 18% of policyholders in brush fire danger zones opted for replacement cost coverage, but many who did not say they never received the notice.

Although both Sproull and the Kordics said they requested higher policy limits through their agents, Harris said records showed no evidence of those requests.

“We can’t tell agents and brokers how to deal with their clients,” he said.

Ossias said they should be doing just that.

“After the Oakland firestorm, when it was discovered the companies had seriously underinsured people, they have taken more trouble to appraise houses correctly and let people know what they’re getting,” she said. “While those companies have been doing that, the governing board of the Fair Plan has not made sure the Fair Plan does the same thing.”