Insurance Companies Taken to Task Over Handling of California Wildfires

Thousands of people have been affected by the California wildfires and must face the stressful task of putting their lives back together. Some have lost loved ones, others have had their homes destroyed, while still others have faced the uncertainty of being evacuated and not knowing what they would return home to find.

Making the situation worse is that many of those whose lives were turned upside down by the California wildfires must now deal with fire insurance companies as they rebuild their lives.

Navigating the fire insurance claim process can be complicated and stressful, especially during an emotional time in your life. Having an experienced fire insurance attorney with you as you prepare your claim or file an appeal will help ensure you receive the damages you’re entitled to

The California Department of Insurance has issued a warning to home insurance companies, warning them that they must follow state law when it comes to handling claims related to the recent California wildfires. In a news release, the department notes that concerns have been raised that not all insurers handling fire claims linked to the California fires are compliant with state law, including making false or incorrect statements to policyholders. Unfortunately, if policyholders are not aware of the law; or of their rights, they may believe false information, which could limit the compensation their home insurance company gives them.

Claims Adjusters Allegedly Violating California Fire Insurance Rules

The situation stems from the California wildfires that destroyed parts of the state, including Santa Rosa and Sonoma. On October 9, 2017, California Governor Jerry Brown proclaimed a state of emergency in several California counties. Following that, Insurance Commissioner Dave Jones declared an emergency situation and authorized claims adjusters who are out-of-state (not in California) and do not have their California license to adjust claims in the areas affected by the fires.

The purpose of the authorization was to allow claims to be processed more efficiently so policyholders could receive their initial payments more quickly. Unfortunately, according to the insurance commissioner, policyholders, public officials, and other stakeholders have issued complaints that some claims adjusters have given false and/or misleading information to policyholders.

Among the false claims made by claims, adjusters were that policyholders have only between six and 12 months to collect their full replacement cost to rebuild. Under California law, however, any claims related to a "state of emergency" situation—which the wildfires were—have no fewer than 24 months.

Other incorrect statements included that policyholders would not receive full replacement benefits if they did not rebuild in the same location. In fact, under California insurance law, policyholders can rebuild on the same location, build in a new location, or purchase a home already built in a new location. Furthermore, some insurers reportedly claimed that the additional living expense benefit would expire in 12 months when it expires in 24 months during a state of emergency.

Although adjusters without California licenses can adjust claims linked to homes that were destroyed in the fires, those adjusters must still understand and comply with all state insurance laws.

California Department of Insurance Issues Formal Notice

As a result of the allegations made against insurance companies, the California Department of Insurance issued a formal notice, warning insurers of their duties under California law.

Helping residents start the claims process in the face of so many losses and claims necessitated extraordinary actions," said Insurance Commissioner Dave Jones in a press release. "While getting claims settled is a priority, it must be done according to the laws in place to protect policyholders through a difficult process. I issued this notice to remind insurers that claims adjusters must be properly trained and process all claims according to California law."

Unfortunately, many policyholders might not be aware of California insurance law or how it relates to their fire insurance claim. This may result in them agreeing to less compensation than they are entitled to or rushing to get a claim in too quickly without all the necessary documentation.

Investigation into What Caused the Fires Ongoing

In all, 43 people died, and more than 8,000 buildings burned down in the wide-ranging California fires. Meanwhile, losses linked to insured properties are expected to run higher than $1 billion. The cost associated with fighting the fires sits at around $189 million, the Los Angeles Times reports.

Although officials have not yet released the cause of the blazes, wildfire lawsuits have been filed against Pacific Gas & Electric (PG&E), alleging the company was responsible for at least some of the fires, thanks to downed powerlines and improperly maintained vegetation. More than 100 people are so far represented in around 15 lawsuits, claiming PG&E's actions caused the fires that damaged so many homes and businesses.

Both Cal Fire and the California Public Utilities Commission are looking into the fires, and the commission is also looking into whether any of PG&E's actions were factors in the fires spreading.

A complete investigation into the causes of the California wildfires and their spread could take a year or more, and with more than 100 fires started in approximately 10 days, there is a possibility that the cause of some fires will not be determined.