Many Southern California wildfire survivors are facing insurance delays

from Levi SumagasaiCalMatters

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A year after the deadly wildfires in Los Angeles County, California’s property insurance market remains troubled; survivors sue insurers for delayed or denied claims; and most of the state’s policyholders are likely to see premium increases.

Seven out of 10 Los Angeles fire survivors have yet to return home, some in part because of delays in insurance claims, according to a new study released this week by the Department of Angels, a nonprofit organization formed in the wake of the fires.

The survey also found that 4 in 10 policyholders experienced insurance problems, such as huge premium increases and reduced coverage, even though state law imposed a one-year moratorium on insurers that canceled or did not renew customers’ policies after the governor declared a state of emergency. Those with homes that didn’t burn down but were still standing were especially likely to see big increases in their premiums, according to the survey of 2,443 adults from Nov. 18 to Dec. 2, 2025.

Insurance premiums for everyone, not just fire survivors, were already expected to rise under new rules from Insurance Commissioner Ricardo Lara. The commissioner, under pressure to improve insurance availability in the state, last January implemented a plan that aims for faster rate reviews and allows insurers to use modeling of catastrophes and reinsurance costs in setting their rates. The plan went into effect just days before the LA fires.

Now, the response to the fires could also lead to even higher insurance premiums across the board, said Amy Bach, executive director of the consumer advocacy group United Policyholders.

“I advocate for disaster survivors, but also for the entire policyholder community,” Bach said. “For every Delisting bill, for every improvement we make to prevent post-disaster trauma around underinsurance, there is a cost.” She said such actions would have implications for both the affordability and availability of insurance.

“Eliminate the list,” which Gov. Gavin Newsom signed into law last year, requires insurance companies to pay 60 percent of personal property coverage limits, up to $350,000, to policyholders who suffer a total loss without requiring them to submit a detailed inventory for at least 100 days.

Still, Bach knows such mandates are needed to improve the experiences of fire survivors, and lawmakers are introducing new bills to address their concerns. Her own group released a study in November reporting policyholder complaints that included delays in insurer communication, delays in payment of claims and the assignment of multiple corrective claims.

The Department of Angels survey found that customers of State Farm and FAIR Plan of Last Resort—California’s two largest insurers—were most dissatisfied with their insurers’ response. The California Department of Insurance is investigation into State Farm’s response to the firesand has taken legal action against the FAIR plan and its response, particularly for smoke damage claims. These insurers, along with other companies, also face lawsuits against policyholders.

“Our customer reviews reflect a different experience than what is being reported,” Tom Hartman, a State Farm spokesman, said in an email. “We are supporting more than 13,500 customers affected by the wildfires, more than any other carrier, and have already paid more than $5 billion to help them recover.”

“We paid almost $200,000 out of pocket to renovate our home due to FAIR Plan’s complete denials of our remediation,” said Angela Jacchetti, spokeswoman for the Angel Division, which worked on the study. She is also a fire survivor whose home in Altadena was not burned but was severely damaged.

“While we are unable to comment on individual policyholders’ claims, the California FAIR Plan does not specify where policyholders reside,” said Hilary McLean, a spokeswoman for the plan. “The FAIR Plan assesses each claim on its own merits and pays all covered claims up to individual policy limits.”

The FAIR plan said in a press release this week that it has processed about 5,400 claims and paid out nearly $3.5 billion to policyholders. It also said it “has taken steps to improve its ability to serve policyholders” by providing a line of credit and reinsurance, aided by a $750 million catastrophe bond made possible by new law allowing the FAIR plan to receive bond financing through the California Infrastructure and Economic Development Bank.

The Property & Casualty Insurance Association of America says insurance companies have paid $22.4 billion of the expected $40 billion in total claims from the Los Angeles fires.

The Department of Angels survey also found that 79 percent of survivors face financial hardship, with more blacks, Asians and Hispanics behind on their rent or mortgage payments. In addition, 40 percent of respondents said they were very dissatisfied with the local, state, and federal response to their needs.

Newsom said Tuesday that he is working with state lawmakers, the banking industry and others on new recovery loans and that the state will expand eligibility for the CalAssist mortgage fund. The governor’s office did not respond to CalMatters’ questions about whether it plans to offer any assistance to renters who survived the fires or what else it is doing to keep up pressure on the federal government for long-term disaster funding.

“This report says exactly what we’ve been hearing,” said Michael Soler, a spokesman for the insurance department. “Wildfire survivors want action and results.” He said the questions in the study were top priorities for the department and, among other things, pointed to a smoke damage task force the department had convened.

A bill sponsored by Lara and introduced by newly appointed Senate Insurance Committee Chairman Steve Padilla, D-San Diego, late Tuesday would require insurance companies to submit to the state their disaster recovery plans related to claims processing; double penalties for violations of fair claims practices during emergencies; extension of claim advance payments; provide policyholders with status updates within five days when their adjuster is changed; and more.

This article was originally published on CalMatters and is republished under Creative Commons Attribution-NonCommercial-No Derivatives license.