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Dawson and Rosenthal
Dawson and Rosenthal

Insurance won’t always cover wildfire-related claims

When 2017’s wildfires ripped through California, hundreds of thousands of policyholders trusted that their insurance policies would provide adequate coverage for the damage. Unfortunately, many Californians are finding out the hard way that insurance companies do not always come through for their clients. Even if a policy provides coverage for fire damage, an insurance company will not always honor it.

There are several ways in which insurance companies try to evade paying their fair share of fire-related damages. It is important for consumers to recognize and understand these reasons when they are dealing with their insurance provider. To help you, we have compiled some of the most significant ways that insurance companies try to evade wildfire claims.

  • When a widespread natural disaster like a wildfire occurs, insurers often claim that their funds are stretched too thin to provide full coverage for their policyholders. Rather than offer adequate coverage, they will offer their clients a lowball figure that will not cover all of the damage. This may disproportionately affect homeowners who live in high-risk areas and are in high need of coverage.

 

  • Some insurers will try to surreptitiously alter a policy. When the time comes to renew a policy, many insurers will attempt to change the terms and conditions without the policyholder’s knowledge. This leaves the consumer liable for more coverage than they originally thought.

 

  • The wildfires have caused billions of dollars in insurance claims. Some insurance providers have tried to minimize their costs by ceasing to write new policies or being more selective about whom they insure. Farmers and State Farm rejected more homeowners’ insurance applicants, while Allstate stopped writing new policies altogether.

 

  • The previous three examples are situations where a provider’s actions are dishonorable, but still legal. In some cases, an insurer who denies a claim may be doing so illegally. An insurance company that willfully denies an otherwise legitimate claim is said to be acting in bad faith. If a policyholder’s wildfire-related claim is rejected for no apparent reason, it may be an example of bad faith insurance. Policyholders whose claims are rejected in bad faith may be entitled to compensation.