3 days ago
New lawsuits accuse insurance companies of secret scheme to drive up prices for homeowners: 'Conspiracy and collusion'
Two lawsuits filed in Los Angeles say insurance companies colluded to force homeowners in high-risk wildfire areas onto California's FAIR insurance plans.
According to the Associated Press, the lawsuits want to hold 25 major insurance companies responsible for the "illegal scheme" that has limited coverage for homeowners. The filings say their practices are "in violation of California's unfair competition and antitrust laws."
The lawsuits allege that the insurance companies, including State Farm, worked together in 2023 to deny high-risk policies, making the FAIR Plan many homeowners' only option.
The FAIR Plan is California's insurer of last resort. It's a program that gives high-risk homeowners access to insurance policies if they're denied through traditional avenues. These high-premium policies offer basic and limited coverage capped at $3 million. These policies are not enough to cover damage caused by severe disasters.
And disaster struck in January, with extreme wildfires that destroyed almost 17,000 structures. Countless homeowners were left underinsured on the FAIR Plan.
Many people can't get a traditional policy because the insurance companies don't want to be financially responsible for these natural disasters. Wildfires, droughts, floods, and other extreme weather events are becoming more frequent.
By denying coverage in areas prone to climate instability, they're prioritizing profits. Furthermore, over $500 billion of U.S. insurance companies' investments are in the oil and gas industry, per the Center for International Environmental Law.
Burning oil and gas creates harmful emissions that destabilize climate conditions. This leads to extreme weather events that destroy homes and leave people in financial ruin.
Michael J. Bidart, who represents the homeowners, said in a statement, per AP: The insurance companies "have reaped the benefits of high premiums while depriving homeowners of coverage that they were ready, willing, and able to purchase to ensure that they could recover after a disaster like January's wildfires."
Insurance companies are denying coverage to boost profits while making money off the very practices that are causing climate instability.
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Bankrate advises homeowners to save claims for major losses, check dwelling coverage, and be proactive about caring for their property.
But people are hopeful these lawsuits will help reinstate fair premiums and policies.
According to Bankrate, Stephen G. Larson, another lawyer representing the homeowners, said: "California's antitrust and unfair competition laws exist to address the very kind of conspiracy and collusion that the complaints allege the defendants engaged in."
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