Claims were most frequently denied by these home insurance companies

 

In 2023, three of California’s major home insurance companies denied claims at a higher rate than what was seen in other parts of the U.S., a new report found.

Questions have swirled about the home insurance industry - or lack thereof - in California in the wake of wildfires that have destroyed more than 12,000 structures across Los Angeles. The blazes continue to rage as crews work to contain them. People who have lost homes are reporting they didnt have insurance after many companies stopped offering home insurance policies in the state.

A Los Angeles Times report on three of the largest home insurance companies in California and found that affiliates of Farmers Insurance, based in Los Angeles, denied approximately 50 percent of its claims, according to the survey.

A pair of USAA affiliates declined 48 percent of the claims made in 2023, and Allstate Insurance — based in Illinois — denied 46 percent of the claims made that year. All were denied before the recent wildfires.

The report done by Weiss Ratings found that the denial rate across the entire U.S. was about 37 percent in 2023. That number is up by 12 percent over the denial rate 20 years ago — 25 percent — but still overall much lower than the rate of the three major California insurers.

“It’s not fair for me to say all these [rejected] claims were legitimate, but it’s equally unfair for insurance companies to claim they’re all illegitimate,” Martin Weiss, the CEO of Weiss Ratings, told the LA Times.

Weiss theorized that major companies were rejecting more claims due to the increase in climate-related events that cause damage — or outright destroy — homes.

More frequent, extreme climate events — a result of the human-driven climate crisis — have sent insurance costs through the roof and have, in some cases, led to companies dropping clients in disaster-prone regions.

California's Insurance Commissioner Ricardo Lara made sure insurers couldn't pull the same move on the LA wildfire victims. He barred insurance companies from dropping or refusing to renew any client who was affected by the LA wildfires for up to a year.

“Losing your insurance should be the last thing on someone’s mind after surviving a devastating fire,” Lara said in a statement Thursday. “This law gives millions of Californians breathing room and hits the pause button on insurance non-renewals while people recover.”

However, just because insurance companies can't drop or refuse to renew a client doesn't mean they have to approve all claims, as detailed in the Weiss report.

While the report seems somewhat damning for major insurance companies in California, insurers who analyzed the Weiss report disputed some of its claims to the LA Times.

The insurers pointed out that many of the claims included in the report were closed and no payout was given because the damage reported did not clear the cost of the policy's deductible, or was otherwise not covered by the policy.