Four months into insurance claim delays and disputes, a new blow to fire victims: A rate hike
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For four months, the frustrations and indignities have continued for victims of the Palisades and Eaton fires, especially for those still battling their insurance companies.
On Saturday, I watched as more than 200 people joined a Zoom meeting in which a parade of homeowners laid out horror stories involving State Farm and California FAIR Plan insurance policy claims that have been delayed, disputed or dismissed.
“The fire was just the start of their trauma,” said Altadena resident Joy Chen, who heads the Eaton Fire Survivors Network. In a complaint log Chen compiled, one homeowner said, “I literally have panic attacks everyday. I’ve lost 20 pounds since January 7th. My hair is falling out and I’m scared.”
Fire victims say disputes have involved, among other things, inspection and remediation of contaminants in homes and on properties, delayed coverage of temporary lodging expenses, and what many consider lowball payouts for losses.
And now comes another blow.
On Tuesday, state Insurance Commissioner Ricardo Lara handed State Farm General a 17% emergency rate hike. This happened just a few hours after an administrative law judge endorsed the rate hike, kicking the matter over to Lara.
The same Lara who, in that Saturday Zoom, heard homeowners plead with him not to award a rate increase until his department investigated whether State Farm was meeting its legal obligations in handling the claims of policyholders.
Insurance Commissioner Ricardo Lara adopted an administrative law judge’s recommendation Tuesday and granted State Farm General, the state’s largest home insurer, a 17% emergency hike in its homeowners insurance rates.
Lara said at the time that a so-called “market conduct” exam was “not off the table,” and “we are not necessarily opposed to that.”
It was a tepid response, and I’m being generous. The insurance lobby is a force in California, and you want the state insurance commissioner to act like a watchdog, not a lapdog. Especially in this alarming era of elevated fire danger, which brings new risks for both insurers and property owners.
Lara’s critics point out that in the past, he accepted campaign donations from the insurance industry after saying he would not. And as my colleague Laurence Darmiento has written, Lara’s attempts to make insurance more affordable and available have involved “closed door meetings” with insurers “as he hashed out his reforms.”
Now Lara has added “insult to injury” for customers who will see double-digit rate hikes “while State Farm is mishandling their existing claims,” in the words of Consumer Watchdog Executive Director Carmen Balber.
Chen was just as blunt:
“We are deeply disappointed by Commissioner Lara’s decision to approve a rate hike for State Farm — without even investigating the hundreds of firsthand reports we submitted of illegal delays, denials, and low-ball offers.”
Lara said in a statement Tuesday that he expects State Farm to provide “the highest level of service” and to “fulfill its promises.” He said the company now has to “justify its financial condition and detail its recovery plan in a full rate hearing before a neutral judge and my Department’s experts.”
And Lara said the company must get a $400-million cash infusion from its parent company to address its financial issues. Maybe the State Farm CEO can kick in a few bucks of his own, having pulled down $24 million in pay and bonuses in 2022.
The administrative law judge had said the rate hike was fair and necessary, and in the interest of consumers, “effectively functioning as a rescue mission.” And State Farm called it “a critical first step” in allowing the company “to continue serving our California customers.”
Continue serving? A lot of customers say they aren’t being served, because State Farm has not been a good neighbor. A guy named Jake pops up everywhere in the company’s TV ads, but he hasn’t been spotted in Altadena or the Palisades.
Unhappy California FAIR Plan customers teamed with those from State Farm on Saturday’s Zoom, and after getting an earful, Lara asked Chen to forward him complaints she had logged.
She sent 381 on Monday.
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One, from a Palisades resident whose home was destroyed, said that despite 50 years of doing business with State Farm, “We have had 8 adjusters so far and a consistent lack of responsiveness.”
“We have a total loss and they are still dragging everything out,” said another.
“We paid our premiums believing that when crisis came, we would be protected,” said yet another complaint. “Instead, we’ve been met with delay, deflection and denial — pushing families to the brink of financial ruin, housing instability and emotional collapse.”
During the meeting, Sierra Madre resident Wendy Davis, a retired attorney whose house was spared by the Eaton fire but suffered smoke damage, read the exact description of her State Farm policy:
“This policy is one of the broadest forms available today, and provides you with outstanding value for your insurance dollars.”
But that wasn’t the case, Davis said, asking Lara, “How is that not fraud?”
“I know how to read a contract,” she said. Her contract says “it will cover the testing of your home for contaminants, if those contaminants are caused by fire and smoke.”
And yet she was denied coverage for the hygienist she hired, Davis said, and she was not immediately compensated for expenses while living in temporary lodging in Alhambra.
“They delayed from the outset,” Davis told me when I met with her and her husband, Mike Noll, at their Sierra Madre home, which is still having contaminants cleared out. “We didn’t get a meaningful adjuster for a month, and he was my fifth.”
That’s a common complaint from fire survivors — the adjuster shuffle. Davis said State Farm finally addressed her complaints, but only after months of persistence and better cooperation from her seventh adjuster.
“We can fight with them and defend ourselves,” Davis said, but she worries about “the elderly, single moms” and anyone who doesn’t have her background in law. “This is a full-time job, fighting with them, and people can’t defend themselves.”
After all they’ve endured, it shouldn’t have to be that hard.
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