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Home > Celestial Blood > CA insurance commissioner offers advice for residents affected by fires
Podcast: Celestial Blood
Episode:

CA insurance commissioner offers advice for residents affected by fires
Category: Arts
Duration: 00:00:00
Publish Date: 2025-01-13 20:00:00
Description: Massive insurance issues lie ahead for California following the past week’s wildfires that devastated both East and West LA. California Insurance Commissioner Ricardo Lara addresses challenges facing homeowners, possible solutions, and the future of the state’s insurance market. Lost your home? Take these steps now Shoot pictures of whatever’s left of your properties — and don’t remove anything before you do so. Have an electronic copy of your insurance policy. If you don’t, call your insurance company or the commissioner’s office at 1-800-927-4357. Collect receipts of all expenses since you evacuated. Document all conversations with your agent/broker. Consider creating a new email account exclusively for fire-related housing and recovery correspondence. This can help simplify the claims process. The insurance market and claims process Lara has barred insurers from canceling or not renewing home policies in fire-affected areas for a year. The moratorium is important, he tells KCRW, because it gives people a year-long reprieve from dealing with future cancellations, and in the meantime focus on the recovery/rebuilding effort. He adds, “That also gives me an opportunity to really assess these insurance companies and see where they're at, how much exposure they have, and start negotiating with them around what we're going to do moving forward. And it also [gives] time [for] just everybody [to] calm down, to figure out what the real numbers are.” Lara notes that he wants to add businesses to this moratorium as well. “My No. 1 goal right now is to make sure people start their claims process, and start getting the resources and services that they contracted with their insurance company to do.” Staff from the California Department of Insurance will meet claimants in-person and walk them through these steps in Santa Monica on January 18 and 19, then Pasadena City College on January 25 and 26. Lara emphasizes that people should not sign anything under duress, especially since scams will pop up. “[Scammers will] be asking you to sign things or make false promises, or for example, say, ‘Hey … if you sign here, I'll get you 70% of the money that you can, and I'll get it to you right now.’ Well, no, you're entitled to 100% of that money. And so unfortunately, we see this after the Hawaii fire. We've seen it after Paradise. And so we just want people to be vigilant and understand that if they have any question, we will review people's licenses, and they could just call us at 1-800-927-4357.” Hiring a middleman to navigate the insurance process Some people may consider this option if they’re swamped with work and kids, and don’t have time to be on the phone or send emails. Does Lara recommend hiring a broker or middleman? It depends on your resources, but you shouldn’t have to spend more money to get claims paid, he says. If you do decide to hire help, make sure they understand the state’s consumer protection laws. "It's imperative to also understand that there is a cooling-off period,” Lara notes. “Once you get access to your property, people shouldn't be soliciting you. That's already a red flag if somebody's soliciting you in your property. That is not coming from the insurance company. That most likely is going to be an out-of-state adjuster or an independent adjuster. So just be leery of these folks. They tend to prey on people when they're at their most vulnerable.” And do private insurance companies have carveouts for how fires start — arson versus weather and natural causes? Lara says it’s not about how the fires start, but how they spread. “The fires were flamed from the Santa Ana winds and then moved across as wildfires. So we are operating under a wildfire scenario. … We are requesting the insurance companies to be as lenient as possible, if there should be any exemptions around that.” FAIR Plan California’s decades-old plan is designed for residents who can't obtain insurance through a regular company — for example, if a company says, “We won’t cover your area, it's too high-risk for fire.” This is a pool of money from insurance companies — no taxpayer dollars are involved. “It has been clear that reforms have been needed for the last 30 years. … The FAIR Plan is capped at $3 million, so it's not like they're going to be covering multi-million dollar homes. Maybe they'll have the FAIR Plan and then have a wrap-around policy,” Lara says. He adds, “We still have to assess how many partial … homes were destroyed, how many of them have only smoke damage or other type damage. This is why I don't like to get ahead of myself in terms of what the estimates are going to be, because then we come in and do a data call, and then start really looking at what the raw numbers are.” Still, he does acknowledge that FAIR has exposure of some $6 billion just in the Palisades. “They also have $5.6 billion in reinsurance. And then the assessment, which is another, I believe it's $1 billion from the companies to cover the FAIR Plan.” Is Lara at all worried that taxpayers and other ratepayers will have to bail out the FAIR program after these fires are extinguished and claims are processed? “As of the conversations I've had last week with the FAIR Plan, we feel very confident that they could pay out the claims and for the amount of exposure that they have. … In terms of its long-term financial stability, honestly, it would have to be an armageddon type of of situation where you have multiple mega fires in the state that would get to the point where the FAIR plan pays off through its revenues, then you go into the reinsurance money, then you go into the assessment for the insurance companies. And then they would have to come to the insurance commissioner to look at what a 50-50 split would be between the insurance companies and taxpayers.” Lara says that unlike other states, California is ensuring that insurance companies return to provide coverage in areas at risk of wildfire. “It was just the day that the fire started, we had Mercury saying that they were coming back into Paradise and expanding. We've had Farmers come in and say they're ready to come back in. So we know the reforms were needed, they're working. And we have to continue to price these premiums to the risk.” Insurance market lookahead post-Palisades Fire Is Lara confident that when all of this is over, the insurance market will remain, and insurers won't be bankrupted? “I feel confident that we will continue to modernize our department and the market, and that insurers are going to respond accordingly. … This is why you pay that premium to make sure that the insurance companies have enough money to pay out those claims, that we have an entire solvency department that looks towards that. … I feel we're in a better place now with these reforms to meet this tragic moment for so many Angelenos,” he says.
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