Homeowners Suing AAA Insurers and USAA over LA Wildfires

Some homeowners who lost their homes in the Los Angeles wildfires have filed lawsuits against three large insurers over claims payouts they say didn’t cover their losses.

The lawsuits were filed in Los Angeles County Superior Court this week. They say USAA and two AAA affiliated insurers underestimated the replacement cost of their homes and left them underinsured and without enough money to replace or rebuild their homes after the Jan. 7 wildfires.

The lawsuits allege fraud, negligence, breach of contract and other causes of action, and seek damages and reform of the insurers’ practices.

“These families paid their premiums, trusted their insurers, and did everything right,” attorney Gregory L. Bentley of Bentley & More said in a statement. “But when disaster struck, they learned their coverage was little more than an illusion. These companies promised peace of mind, but instead left their members stranded, homeless, and hopeless.”

AAA media relations contacts have been reached out to for comment.

A USAA spokesperson said the carrier just received notice of the lawsuit and they are reviewing the details.

The spokesperson said they can’t comment on the specifics of the case, but said “USAA’s dedication to outstanding member service is widely recognized.”

“When wildfires struck Southern California, our teams were on the ground within days, working to support our members in their time of need. To date, we have paid nearly $1.4 billion to help members recover from their losses. USAA has made payments on more than 90% of wildfire-related homeowners claims, and we remain committed to working with every member until all claims are settled.”

The plaintiffs in the lawsuit filed against the two AAA insurers say they bought a three-bedroom, two-bathroom 1,872-square-foot home Drive in Malibu in 2020, according to the lawsuit. The renovated home had $713,000 in primary dwelling coverage and 125% extended replacement cost coverage, but after the fires the owners received estimates of $800 per-square-foot or more to rebuild, far exceeding the $380 per-square-foot calculations of their insurer, according to an L.A. times story.

The plaintiffs in the USAA lawsuit had a 2,135-square-foot, four-bedroom, three-bathroom near-custom home in Pacific Palisades. The home had $584,000 in dwelling coverage and a 25% home protection endorsement of $146,000, but the rebuilding cost far exceeded the coverage, according to the L.A. Time piece.

The wildfires killed 29 people damaged or destroyed more than 16,000 properties.

The fallout of the fires included large losses for major California insurers, including State Farm. The carrier is asking the California Department of Insurance to approve a large rate increase.

According to the California Department of Insurance, 37,749 claims have been filed related to the fires and $12.1 billion has been paid out.

The losses have factored into bottom lines and even the state’s carrier of last resort. Lara in February approved a controversial California FAIR Plan request for a $1 billion assessment on admitted market insurers to cover claims from the wildfires.

Topics
Lawsuits
Catastrophe
Natural Disasters
Carriers
Wildfire
Louisiana
Homeowners