ALTEDENA, Calif. — Homeowners in the aftermath of devastating wildfires in Altadena and Pacific Palisades are expressing frustration over insurance companies’ slow responses and insufficient claim payouts. Attorneys representing these homeowners report that the issues are particularly severe for properties that have not been deemed a total loss.
As affected homeowners navigate the complex claims process, some legal experts believe that pursuing mass torts based on shared experiences could provide a viable path forward, despite no such cases being filed yet. The Eaton Fire is estimated to have caused around $10 billion in damages, highlighting the significant financial impact of these natural disasters.
While specific insurers have not been publicly named in these claims, dissatisfied clients of State Farm have reported offers that cover only a fraction of their repair costs for homes damaged in the Eaton and Palisades fires. Many homeowners describe the claims process as overly complicated and burdensome, with some required to list every item in their homes for reimbursement.
State Farm, which claims to have the industry’s largest claims force, noted on its website that it has responded to over 12,000 fire-related claims and has disbursed more than $2.2 billion to customers. However, its representatives did not respond to inquiries regarding the allegations from homeowners.
A recent court decision from the 2nd District Court of Appeal has further complicated matters for homeowners. The ruling determined that plaintiffs from the 2019 Saddle Ridge fire could not claim damages unless they proved lasting alterations caused by smoke, soot, or ash. This precedent, according to attorneys, could hinder potential claims related to fire damage from the recent wildfires.
Legal representatives report that insurers are increasingly using language to deny claims based on these precedents. For example, a doctor has recounted that the California Fair Plan refused to pay for smoke-related remediation, claiming it only covers physical damage. Legal experts are concerned that such interpretations may sidestep the nuances of damage analysis.
The situation echoes challenges faced during the COVID-19 pandemic, where courts ruled that the presence of the virus did not equate to permanent property damage. Lawyers fear a similar rationale could now be applied to claims involving ash and chemical damage from wildfire smoke.
To assist those affected, the law firm Reed Smith LLP launched an online portal for inquiry and guidance on insurance claims after the fires, successfully aiding around 80 individuals directly and approximately 500 through online workshops. This initiative also allowed the firm to gain insights into how insurers are managing claims and which companies are responding favorably or otherwise.
“There’s a significant disparity between the costs required to repair and clean damaged properties and the compensation being offered by insurers,” said Reed Smith partner Benjamin Fliegel. He warned that uneducated policyholders might accept much less than what they are entitled to due to aggressive tactics employed by some insurance companies.
As the fallout from the wildfires continues, cash-strapped homeowners are left wondering if they should hire repair services upfront and await reimbursement, adding to the confusion and anxiety surrounding the claims process.
While the legality of insurers’ practices remains unclear, the prolonged claims process raises questions about whether companies are intentionally stalling efforts to manage payouts.
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