When your house is being devoured by a rare fungus, the last thing you want is for the insurance company to drag its feet in checking the problem out. Actually, that’s second-to-last. The last thing you want is for the insurance company to pay you pennies on the dollar for the repairs.

“It’s a wreck,” says one of the owners of an L.A.-area home that had fallen victim to the vicious poria incrassata fungus. “There is no stucco in the back. The windows are gone. There’s particle board and torn plastic. It looks like someone who is in the middle of tearing the house down.”

“It came through 3/4 inch wood,” she tells CBS Los Angeles.

When the homeowners realized the damage that was being done to their house by the fungus, they contacted their insurer, Safeco, which didn’t send out an inspector for 57 days.

When the inspection came, the prognosis was grim.

“They told us ‘We’ve got to stop work because the fungus has spread up into the walls supporting the roof,’” says the husband. “And they had to bring in other contractors to put up a false wall to keep the roof from collapsing.”

To repair all the damage to their house, contractors estimate it will cost between $350,000 and $700,000.

Meanwhile, Safeco offered to pay $18,000, which is only around 5% of the low-end repair estimate.

“You buy the all-risk homeowners insurance for sudden, accidental events,” says the husband. “Well, this was as sudden as it gets. This was overnight.”

The homeowners complained to the State Department of Insurance, which investigated and sent a letter to Safeco saying the company was “in non-compliance with California insurance code section 790.03″ which deals with unfair and deceptive insurance practices.

Still, a District Court judge dismissed the homeowners’ lawsuit, claiming that the $18,000 was in keeping with the terms of the Safeco policy. The homeowners have since filed an appeal with the 9th Circuit Court. Safeco would not comment on the story to CBS, citing pending litigation.

“This house is our biggest investment,” say the homeowners. “It’s our life savings. And half of it is now worthless. The other half is dubious. But that’s why you buy insurance.”

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