Officials in California are launching a variety of hearings and investigations regarding the insurance crisis among victims of the Palisades and Eaton Fires, including the fact that many homeowners were underinsured for the cost of rebuilding their homes in case of total loss.
Breitbart News has reported for years on the fact that insurance companies were leaving the state or canceling existing fire insurance policies due to California’s refusal to allow insurers to raise prices to account for future risks, an approach that only recently changed.
Two other problems have since emerged. One is that even those homeowners who still have insurance often do not have enough coverage to meet the costs of rebuilding. Another is that some insurance companies, notably State Farm, are lowballing policyholders in their initial estimates, pressuring customers to accept meager amounts of compensation, knowing that many homeowners are under extreme financial pressure.
The Los Angeles Times reported earlier this week that California Insurance Commissioner Ricardo Lara — notable thus far for his absence in the crisis — said over the weekend that his office might consider a probe into State Farm’s alleged lowballing, but would depend on receiving sufficient complaints from the public. (The Eaton Fire Survivors Network has since sent Lara hundreds of complaints about State Farm.)
Now, the San Francisco Chronicle reports, the California State Board of Equalization — which reviews property taxes — intends to hold its own hearing on the problem of underinsurance in policies:
California officials plan to hold a hearing later this month to discuss solutions to widespread underinsurance among wildfire survivors, following a Chronicle investigation that exposed the severity of the issue and tied it to insurance companies’ use of flawed algorithms to write homeowner policies.
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Underinsurance is the phenomenon where a homeowner’s insurance policy limits are too low to cover the cost of rebuilding their home. It has emerged as yet another challenge facing survivors of the Eaton and Palisades fires in Los Angeles, which destroyed whole neighborhoods earlier this year. While it’s still unclear precisely how many of these survivors lack adequate insurance to rebuild, studies of previous blazes in California and Colorado have found consistently that between two-thirds to three-quarters of wildfire survivors were underinsured.
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Consumer advocates and wildfire victims told the Chronicle that underinsurance was a major factor in why wildfire victims rarely rebuild their homes. Just 2,800 of the 11,000 homes that burned in the 2018 Camp Fire have been rebuilt. In Santa Cruz County, only 144 homes of the 700 destroyed by the 2020 CZU Lightning Complex fires have been replaced.
The focus of complaints is the companies’ use of algorithms and software programs that have proven faulty. Similar complaints plague insurance companies’ use of software to estimate damage and rebuilding costs.
Governor Gavin Newsom has largely failed to address insurance problems in his state, preferring instead to focus on insurance problems in Republican-run states like Florida, which is also subject to natural disasters.
Joel B. Pollak is Senior Editor-at-Large at Breitbart News and the host of Breitbart News Sunday on Sirius XM Patriot on Sunday evenings from 7 p.m. to 10 p.m. ET (4 p.m. to 7 p.m. PT). He is the author of Trump 2.0: The Most Dramatic ‘First 100 Days’ in Presidential History, available for Amazon Kindle. He is also the author of The Trumpian Virtues: The Lessons and Legacy of Donald Trump’s Presidency, now available on Audible. He is a winner of the 2018 Robert Novak Journalism Alumni Fellowship. Follow him on Twitter at @joelpollak.
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