Like many local wildfire victims, Larry Spainer would like to rebuild his home in the Fountaingrove neighborhood that was burned to the ground in the October 2017 blaze.

And like many others, Spainer has found himself severely underinsured with his $727,800 structure coverage provided by CSAA Insurance Exchange insufficient to build another similar house. CSAA has estimated it might take $1.3 million to rebuild, Spainer contends, but he has home construction cost estimates around $2.3 million.

“I thought about building a smaller home. I thought about building a prefabricated home, which would be cheaper,” said Spainer, who retired three years ago as an aerospace company executive. “I don’t know why I should settle for less than what I have? I’m entitled to have a similar home or similar quality home. That’s what I would like to really, really rebuild.”

And like some other fire victims, Spainer now has gone to court. He and four other Santa Rosa-area homeowners sued CSAA on Tuesday, alleging the carrier systemically underinsured their residences to such a degree that makes it difficult for them to afford to rebuild.

They filed the lawsuit in Sonoma County Superior Court, alleging CSAA — the Northern California insurance arm of the American Automobile Association — committed negligence and fraud in their homeowner policies for years, by underestimating the true cost of rebuilding in the aftermath of a natural disaster.

“These AAA insureds — as well as many other AAA insureds throughout the state — are woefully underinsured in the event of a fire loss and will be unable to rebuild their home,” said Greg Bentley, a Newport Beach lawyer representing the local homeowners.

CSAA is the third insurer to be sued by Sonoma County homeowners who have found themselves severely underinsured — some of them more than $1 million — after the 2017 fires.

Last year, a group of USAA policyholders sued the San Antonio-based insurer alleging it underestimated the amount needed to rebuild and then used a software program, Xactware, to cut its wildfire loss exposure during the claims process. A group of policyholders also sued Farmers Group in October in a similar suit.

The lawsuit against CSAA takes a different path by focusing on “bad faith.” It alleges the insurer made a change in June 2016 that put its customers on the hook for greater losses in the event of a major claim such as a wildfire, but did not properly inform them of the adjustment to homeowner policies.

Previously, CSAA homeowner policies stated the maximum limit of structure coverage “may be adjusted by renewal of this policy to an amount we estimate to be 100% of the replacement cost of the dwelling.”

After June 2016, the insurer placed the onus on the policyholder to update the amount of annual coverage they’d need to be able to rebuild their homes based on current building costs. “You are responsible to advise us if the limits are insufficient to replace your property. At your request, we will assist you in estimating the ‘replacement cost’ of your dwelling,” according to the CSAA’s current homeowner policies.

“Without giving these members proper notice, they bury it within the policy,” Bentley said.

In a statement Tuesday, CSAA spokeswoman Sue Saito defended the insurer and its handling of 3,300 policyholders who filed property damage claims from the North Bay wildfires. The statement did not specifically address the merits of the Sonoma County lawsuit.

“The majority of homeowners’ claims filed after the fires have been successfully closed. Many of our customers have homes under construction, and some have already moved back into their houses,” Saito said in the statement. “The 2017 wildfires had a devastating toll on our North Bay communities, and we will continue to take all of our policyholders’ concerns seriously as we help them move forward.”

However, Spainer said he even bought 50-percent more home replacement coverage that is recommended by industry advocates. That still caps the overall insurance payout for his 2017 fire claim at $1.1 million, leaving him with more than a $1 million shortfall to rebuild at today’s building costs.

He is living in Rohnert Park with rental assistance covered under his CSAA policy, but he shuttles his two children to the same Santa Rosa schools near Fountaingrove where they had lived. The rental insurance provided by CSAA could cover almost three years of renting after the fire, Spainer said. But he worries CSAA may rescind the coverage because he has not been able to show any progress rebuilding given the massive shortfall he faces to build another house.

“They are threatening it might go away. If I am not making progress on rebuilding, they are saying it might go away,” he said of covering his monthly rent.

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