State Farm makes major insurance policy U-turn after devastating LA fires... but it will not benefit everyone
State Farm will offer insurance renewals to Los Angeles residents it had planned to drop.
In a major U-turn, the company said it would renew policies in the badly-hit Pacific Palisades neighborhood, alongside thousands more in Los Angeles county.
However, the offer does not apply to policies that had already lapsed when the deadly fires started on January 7.
State Farm said in March that it would stop offering insurance to 72,000 homes across California, blaming the risk of natural disasters and the impact of inflation.
The Department of Insurance said that among the policies that the company had targeted for nonrenewal, more than 7,600 were in the Palisades fire zone.
State Farm - the leading home insurer in California - said around two-thirds of the policies it had planned to cancel were still active when the fires began.
Customers can now renew these if they wish - rather than hunt for a new and likely costlier replacement provider.
Although the decision to cut policies was made last year, it faced renewed scrutiny when the news resurfaced as the wildfires wreaked havoc across LA. The fires have damaged or destroyed more than 12,000 structures and claimed over two dozen lives.
In a major U-turn, the insurance company said it would renew policies in the badly-hit Pacific Palisades neighborhood, alongside thousands more in Los Angeles county
In fact, California insurance commissioner Ricardo Lara urged coverage providers last week to suspend pending non renewals in the Palisades and Eaton fire zones.
State Farm made the U-turn on Wednesday, a move first reported by The LA Times.
Lara's office said he was in talks with State Farm to get more details about what the change of policy means for residents.
'All eyes are on insurance companies right now, including mine,' Lara said in a statement Wednesday in response to State Farm's decision.
'We are going to keep working to make sure everyone's claims are paid fairly, quickly, and completely.'
A day later, State Farm spokesperson Bob Devereux said: 'This decision reflects our commitment to supporting our customers and goes beyond the department of insurance's request.'
Policyholders in the fire zones would get an offer for a one-year renewal, the company said.
Those with total losses, meanwhile, would get renewals for two years, as is required by law.
State Farm will offer renewals to policyholders affected by the devastating wildfires that it had previously planned to drop
Tens of thousands of people in the LA area have been left displaced or homeless after losing their homes in the catastrophic blaze
'We are in the business of helping people recover, and that's exactly what we're doing right now to those impacted by the fires,' said State Farm CEO Jon Farney
While the decision is good news for many policyholders, some consumer advocates feel it is one of many moves the company should make.
Carmen Balber, executive director of the California-based organization Consumer Watchdog, told DailyMail.com: 'State Farm's announcement is good news for homeowners who were facing the loss of coverage but it's the least the company can do.'
Farney told the LA Times on Tuesday that it has received 6,300 residential and auto claims so far, making it the largest wildfire disaster the insurer has experienced.
Although he said it was too early to determine the damages, some estimates have put them at over $200 billion, which would make it the most expensive disaster in US history.
'This early in this kind of event, especially as it's still ongoing, we don't have information of how big the event is going to be for us, let alone for the industry,' he said.
He added: 'We are in the business of helping people recover, and that's exactly what we're doing right now to those impacted by the fires.
'It's just such a horrible tragedy.'
Insurance Commissioner Lara also announced he had expanded a moratorium issued last week which bans insurers from issuing new cancellation or nonrenewal notices for one year, regardless if they have suffered a loss or not.
'All eyes are on insurance companies right now, including mine,' said State Insurance Commissioner Ricardo Lara
Last year, State Farm gave California an ultimatum - threatening to ax cover if it did not allow it to raise home insurance rates for millions.
Other insurance companies, including Allstate and Farmers Direct, have also limited cover or stopped doing business entirely in the Golden State.
This led to California introducing new regulations aimed at easing the state's home insurance crisis - days before the deadly fires broke out.
It comes as money-hungry landlords and realtors have also been accused of jacking up rent prices in the fire-ravaged areas - some by more than double – as blazes have left thousands of residents homeless and displaced.
Opportunistic landlords have swiftly raised rental rates by as much as 134 percent in some parts of Los Angeles, according to listings reviewed by DailyMail.com.
The shocking increases have occurred despite an emergency declaration by California Governor Gavin Newsom, which bans price gouging above 10 percent of pre-disaster prices, carrying penalties of up to a year in jail and a $10,000 fine.
The inflated figures have sparked outrage among tenant rights advocates as well as some local realtors who have condemned the behavior as 'predatory' and 'disgusting.'
