Couple's devastating loss in arson is a cautionary tale

Sharon and Vince La Vigna’s world literally came crashing down around them a few days ago.

Their house was burning. Neighbors had to pull them to safety. The two were whisked out the door just in time to watch the roof of the home they shared for 45 years collapse. Flames engulfed the structure.

This wasn’t a typical house fire, caused by a burning candle or faulty electrical wiring. A serial arsonist, haunting their neighborhood in San Jose, California, had set fire to their back porch late Saturday and stepped back to watch it burn. He is linked to 13 fires started over six days last week, burning homes and a church—sometimes the same locations more than once.

"Everything we had was in that house," said Sharon La Vigna, 67. "We got out with just the clothes on our backs, and we almost didn’t get out."

Though they escaped uninjured, the La Vignas are perhaps the hardest-hit family in the neighborhood. Not only is their home destroyed, they have no way of replacing it. They owned the home outright and did not have homeowners insurance.

They had been making insurance monthly payments -- until the insurance company switched to an annual premium payment. The couple could not afford so much money upfront. The company dropped them. Since then, they had been trying to find an affordable policy on the 116-year-old home.

As a personal finance journalist, I hear stories like this all too often. Folks write to me online or call into my radio show with many questions about their homeowners insurance. Mortgaged homeowners technically cannot be dropped, because the lender will take out homeowners insurance for the borrower and charge him for it. But mortgage-free homeowners like the La Vignas can be dropped and left to figure it out on their own.

While letting the insurance lapse may feel like the only option when you’re struggling to make ends meet, it frequently just makes a bad situation worse.

[Do you need home insurance coverage? Click to compare plans and quotes from insurers now.]

"Your home is your greatest asset, especially if it’s paid off," said Loretta Worters, spokeswoman for the Insurance Information Institute. "You have to protect it."

Even approaching 70 years old, Sharon La Vigna wanted to work, but she'd been laid off two years earlier from her job at a preschool. Her husband is on disability.

"If we could’ve had insurance, we would’ve," she said. "Nobody thinks this is going to happen to them."

If you are in a situation where you can’t afford your insurance, there are a few methods the Insurance Information Institute suggests that may cut a few dollars off your insurance premium:

• Raise your deductible. Raising it to $1,000 may save you as much as 25 percent.

• Look for bundles with other insurance, such as car or life, which could reduce your premium by 5 to 15 percent.

• If you have the money to invest upfront, consider installing home security devices, which can save anywhere from 5 to 20 percent.

• Ask about discounts, such as a senior discount that could save up to 10 percent at some companies.

It's important not to let insurance lapse. Going without homeowners insurance not only puts homeowners at risk of losing everything, but it can cost them big time when they want to find a new policy. If you are dropped by your homeowners insurance company, finding new coverage is difficult and you’re likely to pay more for it, Worters said.

And if the home -- particularly the roof -- has deteriorated since the last time you took out homeowners insurance, insurers might be reluctant to offer you a policy at all. They might also be concerned that you were dropped from your last insurance company because you couldn’t pay.

For the La Vigna family, neighbors hope to raise some money to help with the cost of replacing the home, or at least help them find a new place to live. A contractor told James La Vigna the cost to replace the 1,500-square-foot, single-story home would run $250,000. It will cost $25,000 just to tear it down.

With those kinds of costs, the couple is not sure they can stay, particularly considering how expensive San Jose has become. They may be better off selling the lot.

Meanwhile, the La Vignas are staying nearby with son James.

The Red Cross had to step in and help Vince, 69, replace the glasses he left behind. Their three cats are still missing, though neighbors are leaving out food and water and keeping an eye out in case they did make it out and return.

They haven’t been allowed inside the home yet, to check the damage and to see if anything is salvageable, because it’s still a crime scene, Sharon said. "My entire life is over there," she said.

But an arrest Wednesday night means that could change soon, they hope.

For now, "we’re just taking it one day at a time," Sharon said.

Ilyce Glink is an award-winning, nationally syndicated real estate columnist, blogger and radio talk show host, and managing editor of the Equifax Finance Blog. Follow her on Twitter @Glink.

[Do you have enough home insurance coverage? Click to compare plans and quotes from insurers now.]