Latest news with #CaliforniaFAIRPlan
Yahoo
2 days ago
- Business
- Yahoo
California's Insurance Gap: Mercury Insurance Details What Homeowners Need to Know
Thousands of California Homeowners Are Underinsured LOS ANGELES, May 29, 2025 /PRNewswire-PRWeb/ -- The devastation caused by January's Pacific Palisades and Altadena wildfires served as powerful reminders of how crucial it is for homeowners to have adequate insurance coverage. In addition to the emotional toll of losing a home, the financial burden can be overwhelming — particularly for those who discover their coverage falls short. According to a recent report in the San Francisco Chronicle, a significant number of California policyholders are underinsured, meaning that they may not receive sufficient funds to rebuild a home comparable to the one they lost. Equally concerning is data from LendingTree, which reveals that of the nearly eight million residences in California, 806,600 are completely uninsured — that's 10.5% of all homeowners in the Golden State. And in some counties, such as Lake, Kings and Humboldt, for instance, the rate is even higher. "Being underinsured can turn a crisis into a financial disaster. Waiting until after a catastrophic event such as a wildfire to review your coverage is far too late," said Kelly Butler, VP and Chief Underwriting Officer at Mercury Insurance. "That's why it is essential to meet with your insurance agent at least once a year to ensure your policy reflects current replacement costs and risks." The issue of underinsurance in California is shaped by a combination of evolving market dynamics and environmental challenges. Rising construction costs, the growing threat of wildfires, and shifts in the insurance market all contribute to a complex landscape for homeowners and insurers alike. Here's a closer look at some of the key factors: Rising Insurance Costs: In wildfire prone areas, premiums have increased in response to heightened risk and construction/materials costs. This can place financial strain on homeowners, and these insureds are most likely to allow their coverage to lapse or to underinsure their properties to lower their premiums. Market Adjustments: Some insurance companies have scaled back their offerings in high-risk regions due to increased losses. As a result, some homeowners need to turn to alternatives such as the California FAIR Plan, which provides basic fire insurance coverage, when private options are unavailable. So, what was originally intended as a provider of last resort is now used by 4% of the state's homeowners, up 300% from 2018. Homeowners may need to supplement FAIR Plan policies with additional "wrap-around" policies for broader protection. Increased Wildfire Risk: The growing frequency and severity of wildfires in California have made it more difficult — and costlier — to insure homes in certain areas. This has impacted both insurance availability and affordability. Regulatory Constraints: Proposition 103, passed in 1988, requires insurers to base rates on historical losses. While designed to protect consumers by regulating how insurers set rates, it has also created challenges for insurers that need to adjust rates to account for evolving risks and rising rebuilding costs, which adds complexity to the current insurance landscape. Policy Type Matters: Understanding the difference between actual cash value and replacement cost policies is crucial. The former may not cover the full cost to rebuild, while the latter aims to replace what was lost in today's dollars, up to the policy's limits. What Can Homeowners Do? Reducing wildfire risk on your property remains one of the most effective strategies. Creating defensible space, hardening your home, and taking other fire-mitigation measures can help lower your insurance costs — and may even qualify you for discounts. But homeowners can't solve this issue alone. Broader efforts are also underway to improve the availability and affordability of insurance coverage in high-risk areas. "Fortunately, it's not all doom and gloom," added Butler. "The state is beginning to make meaningful changes. Last year, Insurance Commissioner Ricardo Lara introduced California's Sustainable Insurance Strategy, which supports more accurate pricing in wildfire-prone areas and aims to expand coverage options for homeowners who need it most." By staying informed, proactive, and working closely with their insurance providers, California homeowners can better protect their properties and financial futures — even in the face of growing environmental risks. About Mercury Insurance Headquartered in Los Angeles, Mercury Insurance (NYSE: MCY) is a multiple-line insurance carrier offering personal auto, homeowners, and renters insurance directly to consumers and through a network of independent agents in Arizona, California, Georgia, Illinois, Nevada, New Jersey, New York, Oklahoma, Texas and Virginia, as well as auto insurance in Florida. Mercury also writes business owners, business auto, landlord, commercial multi-peril and mechanical protection insurance in various states. Since 1962, Mercury has provided customers with tremendous value for their insurance dollar by pairing ultra-competitive rates with excellent customer service, through nearly 4,100 employees and a network of more than 6,500 independent agents in 11 states. Mercury has earned an "A" rating from A.M. Best, as well as "Best Auto Insurance Company" designations from Forbes and For more information visit or follow the company on Twitter or Facebook. Contact: PCG – Shane Smith (424) 903-3665 (ssmith@ Media Contact Shane Smith, Mercury Insurance, (424) 903-3665, ssmith@ View original content to download multimedia: SOURCE Mercury Insurance Sign in to access your portfolio
Epoch Times
15-05-2025
- Business
- Epoch Times
California Approves State Farm's 17 Percent Rate Increase Amid Insurance Crisis
California homeowners hoping to get a break on their home insurance premiums any time soon might be waiting a while longer. State Insurance Commissioner Ricardo Lara The approved rate increase is lower than the 22 percent emergency rate increase Seligman The 17 percent rate was chosen to balance protections for the consumer and financial stability for the company, he said. The rate increase remains temporary and subject to further review. State Farm's emergency rate increase will take effect June 1, and a full rate hearing will be scheduled in the future by the judge. Related Stories 5/13/2025 5/13/2025 Lara said in a statement that California is 'in a statewide insurance crisis, affecting millions of Californians.' A number of insurance companies have A 2024 United Policyholders survey The survey also found that, of those policyholders who had endured premium hikes in the prior couple of years, the rate increase was more than 96 percent higher. Rates Expected to Continue Rising Home insurance costs in the state will likely continue to increase for the next 10 to 20 years, Michael Wara, director of the Stanford University Climate and Energy Policy Program, predicted during a recent panel in Sacramento called 'Strengthening California's Insurance Market: Expanding Access and Stability,' hosted by the Center for California Real Estate (CCRE). Wara said the industry should be honest with people about the likelihood that they will face increasing insurance costs for the foreseeable future. 'The premiums have to equal the claims. And so, if the claims are going up, the premiums have to go up,' he Panelist David Russell, director of the California State University–Northridge Center for Risk Management and Insurance, told homeowners to expect rising premium costs statewide and said that areas with a lower risk of fires and other disasters will need to subsidize areas with greater risk. 'In high-risk areas, to be able to afford to insure, they're going to have to raise the premium on someone else,' he said during the panel. 'We have a cost-sharing issue.' The panelists also said that California's FAIR Plan, the state-mandated wildfire insurer-of-last-resort, may experience problems due to a surge in enrollment and a significant The FAIR Plan's risk exposure increased from $50 billion in 2018 to $458 billion in September 2024, according to the plan. Established in 1968, the California FAIR Plan is a fire insurance program funded by insurance companies operating in the state that provides basic coverage for high-risk property owners who are unable to obtain insurance in the regular insurance market. In order to provide better overall coverage throughout the state, the FAIR Plan should be depopulated by moving policyholders to other insurance companies, said John Norwood, chief lobbyist for the Independent Insurance Agents and Brokers of California. Commissioner Lara is already pursuing a FAIR Plan depopulation One method the state has adopted to address the crisis is requiring insurance companies to insure more homes in high-risk environments. Reducing Insurance Risk in California The CCRE panelists pointed towards a need to reduce risk in order to support the California insurance market. Wara, for instance, called for government and insurance incentives to promote 'home hardening'—that is, to safeguard homes against wildfire threats. 'We cannot insure our way out of this problem,' he Norwood believes home hardening regulations need to be implemented by the state. 'Right now, the insurance commissioner has the 'safer from fire' regulations, that require companies to provide discounts for home hardening. But you really can't provide discounts when your rates aren't adequate, and hopefully when rates do achieve adequacy, companies [will] recognize home hardening and community hardening,' he said.
Yahoo
14-05-2025
- Business
- Yahoo
Lopez: Four months into insurance claim delays and disputes, a new blow to fire victims: A rate hike
For four months, the frustrations and indignities have continued for victims of the Palisades and Eaton fires, especially for those still battling their insurance companies. On Saturday, I watched as more than 200 people joined a Zoom meeting in which a parade of homeowners laid out horror stories involving State Farm and California FAIR Plan insurance policy claims that have been delayed, disputed or dismissed. 'The fire was just the start of their trauma,' said Altadena resident Joy Chen, who heads the Eaton Fire Survivors Network. In a complaint log Chen compiled, one homeowner said, 'I literally have panic attacks everyday. I've lost 20 pounds since January 7th. My hair is falling out and I'm scared.' Fire victims say disputes have involved, among other things, inspection and remediation of contaminants in homes and on properties, delayed coverage of temporary lodging expenses, and what many consider lowball payouts for losses. And now comes another blow. On Tuesday, state Insurance Commissioner Ricardo Lara handed State Farm General a 17% emergency rate hike. This happened just a few hours after an administrative law judge endorsed the rate hike, kicking the matter over to Lara. The same Lara who, in that Saturday Zoom, heard homeowners plead with him not to award a rate increase until his department investigated whether State Farm was meeting its legal obligations in handling the claims of policyholders. Read more: Insurance commissioner grants State Farm 17% emergency rate hike after L.A. fires Lara said at the time that a so-called 'market conduct' exam was 'not off the table,' and 'we are not necessarily opposed to that.' It was a tepid response, and I'm being generous. The insurance lobby is a force in California, and you want the state insurance commissioner to act like a watchdog, not a lapdog. Especially in this alarming era of elevated fire danger, which brings new risks for both insurers and property owners. Lara's critics point out that in the past, he accepted campaign donations from the insurance industry after saying he would not. And as my colleague Laurence Darmiento has written, Lara's attempts to make insurance more affordable and available have involved 'closed door meetings' with insurers 'as he hashed out his reforms.' Now Lara has added 'insult to injury' for customers who will see double-digit rate hikes 'while State Farm is mishandling their existing claims,' in the words of Consumer Watchdog Executive Director Carmen Balber. Chen was just as blunt: 'We are deeply disappointed by Commissioner Lara's decision to approve a rate hike for State Farm — without even investigating the hundreds of firsthand reports we submitted of illegal delays, denials, and low-ball offers.' Lara said in a statement Tuesday that he expects State Farm to provide 'the highest level of service' and to 'fulfill its promises.' He said the company now has to 'justify its financial condition and detail its recovery plan in a full rate hearing before a neutral judge and my Department's experts.' And Lara said the company must get a $400-million cash infusion from its parent company to address its financial issues. Maybe the State Farm CEO can kick in a few bucks of his own, having pulled down $24 million in pay and bonuses in 2022. The administrative law judge had said the rate hike was fair and necessary, and in the interest of consumers, 'effectively functioning as a rescue mission.' And State Farm called it 'a critical first step' in allowing the company 'to continue serving our California customers.' Continue serving? A lot of customers say they aren't being served, because State Farm has not been a good neighbor. A guy named Jake pops up everywhere in the company's TV ads, but he hasn't been spotted in Altadena or the Palisades. Unhappy California FAIR Plan customers teamed with those from State Farm on Saturday's Zoom, and after getting an earful, Lara asked Chen to forward him complaints she had logged. She sent 381 on Monday. Read more: Lopez: After the fires, starting from scratch in their 70s, 80s and 90s One, from a Palisades resident whose home was destroyed, said that despite 50 years of doing business with State Farm, 'We have had 8 adjusters so far and a consistent lack of responsiveness.' 'We have a total loss and they are still dragging everything out,' said another. 'We paid our premiums believing that when crisis came, we would be protected,' said yet another complaint. 'Instead, we've been met with delay, deflection and denial — pushing families to the brink of financial ruin, housing instability and emotional collapse." During the meeting, Sierra Madre resident Wendy Davis, a retired attorney whose house was spared by the Eaton fire but suffered smoke damage, read the exact description of her State Farm policy: 'This policy is one of the broadest forms available today, and provides you with outstanding value for your insurance dollars.' But that wasn't the case, Davis said, asking Lara, 'How is that not fraud?' 'I know how to read a contract,' she said. Her contract says 'it will cover the testing of your home for contaminants, if those contaminants are caused by fire and smoke.' And yet she was denied coverage for the hygienist she hired, Davis said, and she was not immediately compensated for expenses while living in temporary lodging in Alhambra. 'They delayed from the outset,' Davis told me when I met with her and her husband, Mike Noll, at their Sierra Madre home, which is still having contaminants cleared out. 'We didn't get a meaningful adjuster for a month, and he was my fifth.' That's a common complaint from fire survivors — the adjuster shuffle. Davis said State Farm finally addressed her complaints, but only after months of persistence and better cooperation from her seventh adjuster. 'We can fight with them and defend ourselves,' Davis said, but she worries about 'the elderly, single moms' and anyone who doesn't have her background in law. 'This is a full-time job, fighting with them, and people can't defend themselves.' After all they've endured, it shouldn't have to be that hard. Sign up for Essential California for news, features and recommendations from the L.A. Times and beyond in your inbox six days a week. This story originally appeared in Los Angeles Times.
Los Angeles Times
14-05-2025
- Business
- Los Angeles Times
Four months into insurance claim delays and disputes, a new blow to fire victims: A rate hike
For four months, the frustrations and indignities have continued for victims of the Palisades and Eaton fires, especially for those still battling their insurance companies. On Saturday, I watched as more than 200 people joined a Zoom meeting in which a parade of homeowners laid out horror stories involving State Farm and California FAIR Plan insurance policy claims that have been delayed, disputed or dismissed. 'The fire was just the start of their trauma,' said Altadena resident Joy Chen, who heads the Eaton Fire Survivors Network. In a complaint log Chen compiled, one homeowner said, 'I literally have panic attacks everyday. I've lost 20 pounds since January 7th. My hair is falling out and I'm scared.' Fire victims say disputes have involved, among other things, inspection and remediation of contaminants in homes and on properties, delayed coverage of temporary lodging expenses, and what many consider lowball payouts for losses. And now comes another blow. On Tuesday, state Insurance Commissioner Ricardo Lara handed State Farm General a 17% emergency rate hike. This happened just a few hours after an administrative law judge endorsed the rate hike, kicking the matter over to Lara. The same Lara who, in that Saturday Zoom, heard homeowners plead with him not to award a rate increase until his department investigated whether State Farm was meeting its legal obligations in handling the claims of policyholders. Lara said at the time that a so-called 'market conduct' exam was 'not off the table,' and 'we are not necessarily opposed to that.' It was a tepid response, and I'm being generous. The insurance lobby is a force in California, and you want the state insurance commissioner to act like a watchdog, not a lapdog. Especially in this alarming era of elevated fire danger, which brings new risks for both insurers and property owners. Lara's critics point out that in the past, he accepted campaign donations from the insurance industry after saying he would not. And as my colleague Laurence Darmiento has written, Lara's attempts to make insurance more affordable and available have involved 'closed door meetings' with insurers 'as he hashed out his reforms.' Now Lara has added 'insult to injury' for customers who will see double-digit rate hikes 'while State Farm is mishandling their existing claims,' in the words of Consumer Watchdog Executive Director Carmen Balber. Chen was just as blunt: 'We are deeply disappointed by Commissioner Lara's decision to approve a rate hike for State Farm — without even investigating the hundreds of firsthand reports we submitted of illegal delays, denials, and low-ball offers.' Lara said in a statement Tuesday that he expects State Farm to provide 'the highest level of service' and to 'fulfill its promises.' He said the company now has to 'justify its financial condition and detail its recovery plan in a full rate hearing before a neutral judge and my Department's experts.' And Lara said the company must get a $400-million cash infusion from its parent company to address its financial issues. Maybe the State Farm CEO can kick in a few bucks of his own, having pulled down $24 million in pay and bonuses in 2022. The administrative law judge had said the rate hike was fair and necessary, and in the interest of consumers, 'effectively functioning as a rescue mission.' And State Farm called it 'a critical first step' in allowing the company 'to continue serving our California customers.' Continue serving? A lot of customers say they aren't being served, because State Farm has not been a good neighbor. A guy named Jake pops up everywhere in the company's TV ads, but he hasn't been spotted in Altadena or the Palisades. Unhappy California FAIR Plan customers teamed with those from State Farm on Saturday's Zoom, and after getting an earful, Lara asked Chen to forward him complaints she had logged. She sent 381 on Monday. One, from a Palisades resident whose home was destroyed, said that despite 50 years of doing business with State Farm, 'We have had 8 adjusters so far and a consistent lack of responsiveness.' 'We have a total loss and they are still dragging everything out,' said another. 'We paid our premiums believing that when crisis came, we would be protected,' said yet another complaint. 'Instead, we've been met with delay, deflection and denial — pushing families to the brink of financial ruin, housing instability and emotional collapse.' During the meeting, Sierra Madre resident Wendy Davis, a retired attorney whose house was spared by the Eaton fire but suffered smoke damage, read the exact description of her State Farm policy: 'This policy is one of the broadest forms available today, and provides you with outstanding value for your insurance dollars.' But that wasn't the case, Davis said, asking Lara, 'How is that not fraud?' 'I know how to read a contract,' she said. Her contract says 'it will cover the testing of your home for contaminants, if those contaminants are caused by fire and smoke.' And yet she was denied coverage for the hygienist she hired, Davis said, and she was not immediately compensated for expenses while living in temporary lodging in Alhambra. 'They delayed from the outset,' Davis told me when I met with her and her husband, Mike Noll, at their Sierra Madre home, which is still having contaminants cleared out. 'We didn't get a meaningful adjuster for a month, and he was my fifth.' That's a common complaint from fire survivors — the adjuster shuffle. Davis said State Farm finally addressed her complaints, but only after months of persistence and better cooperation from her seventh adjuster. 'We can fight with them and defend ourselves,' Davis said, but she worries about 'the elderly, single moms' and anyone who doesn't have her background in law. 'This is a full-time job, fighting with them, and people can't defend themselves.' After all they've endured, it shouldn't have to be that hard.
Yahoo
12-05-2025
- Yahoo
Palisades fire victims seek court order forcing FAIR Plan to turn over claims documents
A Pacific Palisades couple is seeking a court order that would force California's insurer of last resort to turn over claims documents following allegations it has delayed payments to fix their fire-damaged home. The lawsuit by Scott and Lissette Jungwirth accuses the California FAIR Plan Assn. of bad faith, breach of contract and other wrongdoing in seeking a temporary restraining order and injunction to obtain photographs taken by their field adjuster, as well as the adjuster's narrative reports and communications with the plan. The Los Angeles County Superior Court lawsuit said the home remains standing but was infiltrated by soot, ash and fire debris carried inside through a broken window. Testing done by a professional hygienist allegedly found heavy metals, lead, cyanide and other contaminants, which would require demolition, removal of dry wall and flooring, and other repairs. That has forced the couple and their young daughter to live in hotels, with friends and relatives and in Airbnbs, yet the plan has failed to restore the home — and turn over the documents so they can better understand the delay, according to the lawsuit. A spokesperson for the FAIR Plan said it does not respond to pending lawsuits. Read more: Ten victims of the Jan. 7 fires sue the California Fair Plan over smoke damages The litigation was filed by the same two law firms — Edelson and Kerley Schaffer — that handled a lawsuit brought by 10 FAIR Plan policyholders last month that accused the insurer of bad faith and breach of contract because of the plan's alleged refusal to properly investigate and pay for the cleanups of homes damaged by wildfire smoke. The FAIR Plan maintains it covers smoke damage claims as required by law and pays for independent industrial hygienists as needed to properly assess what level of remediation a home requires. Monday's litigation similarly names as defendants the state's biggest home insurers, including State Farm General. The Los Angeles-based FAIR Plan is operated by California's licensed home insurers who govern it and share in the plan's profits, expenses and losses based on their weighted market share. State Farm General did not immediately respond to a request for comment. Dylan Schaffer, one of Jungwirth's attorneys, alleged the plan does not turn over adjuster documents because it would show homes are more badly damaged and in need of more remediation than the plan is willing to pay for. "A lot of these adjusters are telling California FAIR Plan the truth: These houses are really badly damaged," he said. "They need all kinds of work. And California FAIR Plan takes those and they slash them." Read more: Property owners sue California insurance companies over alleged 'collusion' following wildfires The lawsuit contends the plan has for years refused to turn over claims-related documents, despite 2001 legislation arising out of the 1994 Northridge earthquake that amended the insurance code and granted consumers the right to such documents. It also cites a Jan. 6 decision in Fresno County Superior Court that granted a FAIR Plan policyholder who suffered wind damage in 2022 access to her claims documents. Schaffer, who also handled that case, said it involves the same issues encountered by the Jungwirths. The request for an injunction was the second lawsuit filed by a Jan. 7 fire victim against the FAIR Plan in the last two weeks. Luis Cazares, an Altadena homeowner, sued the plan on May 2, alleging bad faith and breach of contract. He alleges his home was made uninhabitable by fire and smoke damage, yet the plan only paid him $55,850, which is inadequate to repair it. The lawsuit notes that levels of lead in residual ash in Altadena exceed the amount deemed safe, according to a study done by the Jet Propulsion Laboratory and Caltech. The case was brought by Bradley/Grombacher, a Westlake Village firm, and Aylstock, Witkin, Kreis & Overholtz, a personal injury and product liability firm in Pensacola, Fla., that has handled mass tort cases and represented homeowners suing insurers over hurricane claims. "I want to get him full relief so he can rebuild his life," attorney Bryan Aylstock said. "He paid the premiums. He deserves that, and it's a shame that so far he hasn't gotten it." Read more: Edison hit with lawsuit saying Eaton fire exposed people to toxic substances The attorneys said they intend to file additional such cases. Last week, they also filed a lawsuit against Southern California Edison that claims the utility was negligent in maintaining its infrastructure, triggering the Eaton fire and exposing people nearby to the fallout of lead, asbestos and other toxic substances. Edison officials have acknowledged that their equipment may have ignited the devastating fire, but have cautioned that the cause remains under investigation. The FAIR Plan also is the subject of twin lawsuits arising out of the Jan. 7 fires filed by property owners against the top property and casualty insurance groups in the state. The litigation filed last month accuses the insurers of colluding to drop homeowners and force them into the plan, where they paid higher premiums but received less coverage, thereby reducing the insurer's liability — an effort that significantly benefited them after the catastrophic Jan. 7 fires, since they backstop plan losses. The FAIR Plan was not named as a defendant, but an insurance industry trade group said the lawsuits "defy logic, advance meritless claims, and we are going to focus on solving the challenges in the insurance market in California.' Sign up for our Wide Shot newsletter to get the latest entertainment business news, analysis and insights. This story originally appeared in Los Angeles Times.
