Homeowners in Los Angeles are taking legal action against three major insurance companies after suffering losses in the recent wildfires. They claim that the insurers did not provide enough money to cover the costs of rebuilding their homes. The lawsuits were filed this week in Los Angeles County Superior Court against USAA and two AAA-affiliated insurers.
The plaintiffs argue that these companies underestimated the replacement costs of their homes, leaving them underinsured. Many families are now struggling to find the funds necessary to rebuild after the devastating wildfires that struck on January 7.
Attorney Gregory L. Bentley, representing the homeowners, expressed frustration with the situation. He said these families paid their premiums and trusted their insurers, only to find that their coverage was inadequate when disaster struck. He described the promises made by these companies as an illusion, leaving families feeling abandoned and hopeless.
The lawsuits allege fraud and negligence and seek unspecified damages. In response, USAA stated that they are reviewing the lawsuit but emphasized their commitment to serving their members. They noted that they have paid nearly $1.4 billion to assist members affected by the wildfires and have settled over 90% of related claims.
The homeowners involved in the lawsuits have specific grievances. One couple purchased a three-bedroom home in Malibu in 2020, with $713,000 in dwelling coverage. However, they received estimates of $800 per square foot to rebuild, far exceeding their insurer’s estimate of $380 per square foot. Another couple, whose home in Pacific Palisades had $584,000 in coverage, also found that the rebuilding costs surpassed what their insurance would cover.
The wildfires have had a tragic impact, resulting in 29 fatalities and damaging or destroying over 16,000 properties. The aftermath has created significant financial strain for major insurers in California, prompting some, like State Farm, to seek rate increases from the California Department of Insurance.
In total, there have been 37,749 claims related to the wildfires, with $12.1 billion already paid out. The state’s insurance market is feeling the effects, leading to a controversial assessment on insurers to help cover claims from the fires. As these lawsuits unfold, the plight of homeowners continues to highlight the challenges many face in recovering from such devastating losses.