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More than a year after the devastating Palisades Fire damaged Paul Egan’s home, his daughter Jen continues battling with State Farm over insurance claims. Despite receiving some payouts, the family recently received an estimate that falls tens of thousands of dollars short of their out-of-pocket expenses for fire department compliance and soil testing.
“No one’s asking for a new jacuzzi,” Jen Egan said. “We want my father to be able to return to a safe and habitable home.”
The Egans’ experience mirrors countless others following last year’s deadly Los Angeles County fires. While State Farm reports paying $5 billion on more than 13,500 claims, many survivors express frustration over poor communication, delays, and inadequate coverage.
Rebecca McGrew, another State Farm customer whose Altadena home burned down, has no major complaints about her claims process but discovered she was “drastically under-insured by hundreds of thousands of dollars.” This realization has become alarmingly common among fire victims who find their insurance coverage insufficient to cover rebuilding costs in California’s expensive construction market.
The growing frustration has prompted survivors and community organizations to seek help from elected officials, resulting in several proposed bills aimed at improving insurers’ transparency and responsiveness during disaster recovery.
Senate Bill 876, proposed by Senate Insurance Committee Chair Steve Padilla and sponsored by Insurance Commissioner Ricardo Lara, represents one of the most comprehensive reform efforts. The legislation would require insurance companies to share disaster-recovery plans with the state insurance department and double penalties from $5,000 to $10,000 for violations of fair claims practices during declared emergencies.
The bill would also mandate that insurers notify policyholders within five days when assigning a new claims adjuster—a direct response to situations like the Egans’, who have dealt with three different adjusters.
Additional provisions include expanding policy limits for additional living expenses by 100% in total loss cases, requiring upfront cash-value payments within 30 days of a contract to rebuild, mandating insurers to offer extended replacement cost coverage, and ensuring building-code upgrade coverage applies at rebuild time.
“People need a sense, particularly when they face tragedy, that the underwriters they’ve relied on and paid into for decades, will want to help and not get in the way,” Padilla told CalMatters.
The insurance industry has voiced opposition. Seren Taylor, vice president at Personal Insurance Federation of California, warned that these measures “would worsen the current affordability and availability crisis for Californians” just as the state implements Commissioner Lara’s Sustainable Insurance Strategy aimed at encouraging insurers to write policies in high-risk fire areas.
Other proposed legislation includes Senate Bill 877, which would require insurers to provide claims-related documents within 15 days and disclose changes to repair estimates. Senate Bill 878 would impose 20% annual interest penalties on insurers who fail to meet claims payment deadlines.
In the Assembly, Chairwoman Lisa Calderon of the Insurance Committee is reintroducing regulation on insurers’ use of drone imagery through Assembly Bill 1559. The bill would require companies to notify homeowners about aerial imaging of their properties, ban coverage termination based on drone images taken more than 180 days before notification, and allow homeowners to dispute image accuracy.
“We’ve been hearing from consumers that they’ve been blindsided by these images that were inaccurate,” Calderon said. “I believe homeowners should have the right to request an in-person inspection.”
Calderon also plans legislation to implement recommendations from an upcoming California Wildfire Fund report, expected to address insurance availability and affordability in the state.
These legislative efforts reflect growing concern that California’s insurance market must evolve to address the increasing frequency and severity of natural disasters while still providing adequate, affordable coverage for homeowners in vulnerable areas.
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10 Comments
This is a complex issue with no easy solutions. On one hand, insurers need to maintain profitability, but on the other, they have a responsibility to their policyholders. Improved communication and more realistic rebuilding cost estimates seem critical to bridging the gap.
That’s a fair point. There has to be a balance between insurers’ needs and consumers’ rights. Hopefully these new regulations can find a way to protect both sides and ensure fair, transparent policies that cover the actual costs of rebuilding.
It’s concerning to hear about the ongoing insurance battles faced by wildfire victims in California. With rebuilding costs so high, it’s critical that insurers provide adequate coverage to help families recover. Hopefully the proposed consumer-friendly regulations can help address these issues.
I agree, the lack of sufficient coverage for many homeowners is really troubling. Insurers need to be transparent about their policies and ensure they are properly protecting their customers, especially in high-risk areas.
This issue highlights the need for stronger consumer protections in the insurance industry, especially in high-risk areas prone to natural disasters. Improving communication, streamlining the claims process, and ensuring adequate coverage levels should be top priorities.
I agree. Homeowners need to be able to trust that their insurance policies will actually cover the costs of rebuilding after a catastrophe. These new regulations could make a real difference in helping families recover.
It’s alarming how many homeowners are finding themselves drastically underinsured. With the rising costs of construction in California, insurers need to update their policies to reflect the true rebuilding expenses. Hopefully these regulations can force more transparency and accountability.
You make a good point. Insurers have a responsibility to provide coverage that actually meets their customers’ needs, not just the minimum required. These policy changes could go a long way in restoring trust between insurers and wildfire victims.
The Egan family’s story is heartbreaking. No one should have to fight so hard to get the coverage they paid for, especially after a devastating loss. I hope the proposed regulations can streamline the claims process and ensure adequate payouts for all wildfire victims.
Absolutely. Navigating insurance claims after a natural disaster is stressful enough without the added frustration of inadequate coverage. These new consumer protections seem crucial to help families get back on their feet.