Insurance companies hit with lawsuit from families devastated by California fires: 'Refusing to compete with each other'
After wildfires rocked multiple Los Angeles neighborhoods in January, families have struggled to rebuild.
Many found themselves without enough home insurance — and now, some are suing the huge companies they say are responsible for leaving them in the lurch, according to Realtor.com.
A group of 14 families has banded together against some of the biggest insurance companies in the game, including State Farm and Farmers.
As Realtor.com explained, the lawsuit claims that these companies broke California's antitrust and competition laws by acting in unison to terminate the insurance plans of people who lived in fire-risk areas. Then, they allegedly all refused to sell new policies in those areas and, instead, directed people to the state's backup insurer, the Fair Access to Insurance Requirements.
The thing is, FAIR is a last-resort plan. Traditional insurers help fund it, but its policyholders pay more money than usual for substandard protection, Realtor.com reported.
The plaintiffs in the suit will argue that starting in 2023, the insurance giants pushed people into FAIR — or out of coverage completely — and that this set the stage for the nightmare unfolding in the aftermath of the destructive fires.
"[Insurers] realized that … by working together and all refusing to compete with each other for those policies, they could force everybody into this other plan that they jointly managed and owned and do better," Robert Ruyak, attorney for the plaintiffs, told Realtor.com.
These kinds of unfair policies create a coverage gap that is catastrophic in the event of extreme weather. Remember, these intense disasters are only becoming more frequent as a result of our dirty energy sources heating up the planet.
The L.A. fires caused about $30 billion in real estate losses. As the plaintiffs' case shows, many families suffering high property damages would have been covered under their old policies, but they aren't under FAIR, Ruyak explained to Realtor.com.
This lawsuit may aim to recover funds for the 14 families, which would help them rebuild their homes and their lives. A class-action lawsuit was also filed on behalf of any homeowner left vulnerable under the FAIR Plan, Realtor.com reported.
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