fire insurance Lowball insurers refuse fire coverage – InsuranceNewsNet

If you own a home that has been damaged by smoke from a wildfire, don’t be surprised if your insurance coverage is insufficient or denied.

A new report from Consumer Watchdog alleges that insurers have inserted provisions into the fine print of their home, condo and renters insurance policies that allow them to limit or deny coverage after a wildfire.

Farmers, nationwide and the Automobile Club of Southern California are among the insurers mentioned in the Los Angeles“Up in Smoke” report from a New York-based organization. The California FAIR Plan — which often serves as a last resort for homeowners in fire-prone areas where insurance companies won’t provide coverage — uses the same tactic, the study found.

The report says insurance companies are downplaying or denying claims as California’s wildfire season lengthens and becomes more damaging. The three most destructive years on record by the state were 2017, 2018 and 2020.

Insurance Commissioner Ricardo Lara scheduled a public hearing on the FAIR plan in 9:00 a.m. Wednesday, July 13 in Oakland.

In a fact sheet published on Tuesday, the California Department of Insurance said the report “contains patently false allegations” and that Lara and the department are using “every legal and regulatory tool available” to hold insurance companies accountable for their actions.

The fact sheet adds that 20 insurers removed illegal smoke-limit policy provisions in 2018 after being notified by the department. He further noted that a Nationwide review had resulted in more than $22.4 million additional claims paid to consumers and $165,000 in refunded premiums.

A similar survey of the FAIR plan resulted in more than $156,000 additional payments to consumers to date, the department said.

Founder of Consumer Watchdog Harvey Rosenfieldwho also serves as an attorney for the organization, still maintains that the insurers’ tactics have made bad situations worse.

“People pay into these policies year after year in the hope that they will never have to use them,” he said. “But when they do and they’re told they have no coverage, or they have very little coverage…it adds a financial and emotional burden to a wildfire disaster.”

Dylan Schaffera Oakland An attorney who sued the FAIR Plan and insurance companies on behalf of wildfire victims says a client whose home was damaged by smoke was told by a FAIR Plan representative “to use a Swiffer” to clean up the mess.

“I’m not exaggerating,” he said. “They tell people, ‘Your house isn’t broken, it’s not damaged, so we’re not paying you anything.’ “

In a statement on Tuesday evening, the FAIR plan said it “takes seriously its commitment to ensuring that all California homeowners have access to basic property coverage and the peace of mind they deserve.

“We look forward to presenting the case of the FAIR plan and the facts of this case,” the statement said. “As this matter involves ongoing litigation, we have nothing further to add at this time.”

Based on a review of public records required by the California Department of InsuranceThe Consumer Watchdog report identifies several violations of state law by home insurance companies:

Limits on repairing smoke damage: Smoke is often the most common and costly result of wildfires. Insurance companies have adopted policy provisions that treat “smoke damage” as distinct from “fire damage” and limit compensation for smoke damage to an amount well below coverage. full policy in case of fire.

Arbitrary loss reporting triggers: State law only requires policyholders to report a loss in a timely manner. Instead of setting the reporting deadline based on the date of the loss, some insurance companies arbitrarily base the reporting trigger on another event, such as the “start date of the forest fire”, which can lead the company to refuse such a late claim.

Recovery sublimits: California the law requires that fire insurance policies cover “all losses by fire”. But some insurers limit compensation based on the type of loss caused by a fire or if a homeowner misses the reporting deadline.

Coverage Exclusions: These provisions state that a policyholder has no coverage for losses caused by a wildfire that occur within a certain period of time after purchasing the policy – ​​usually 72 hours.

Assessment Prohibiting Lawsuit Provisions: These provisions prevent a policyholder from suing an insurance company in court for a claim dispute without going through a loss assessment process or after going through an assessment.

Consumer Watchdog claims that these provisions are illegal under California right. The organization further claims that many insurers unlawfully fail to inform policyholders of their legal rights after a government-declared wildfire disaster.

“I’m never surprised what an insurance company will dare to do,” Rosenfield said. “And it’s amazing to me that the Insurance Department for some time failed in its duty to protect the public.

Consumer Watchdog said Lara should investigate all claims denied by insurance companies during and after the historic 2017 wildfires to determine whether they were handled legally, paying particular attention to claims involving damage caused by smoke.

They urge him to impose fines of $5,000 in violation against insurers who have violated consumers’ rights to fair claims and say this should be replaced with $10,000 whether the violations were willful.