Department of Insurance will investigate State Farm's claims process

California launches investigation into State Farm insurance

Californias state insurance commissioner announced an investigation into State Farm over its handling of the thousands of insurance claims from survivors of the Southern California wildfires.

SACRAMENTO, Calif. - With over a million homeowner policies in effect, State Farm finds itself at odds with an insurance Commissioner who has pretty much granted the insurance giant most of what it wants.

State Farm investigation

State Farm calls itself the "Good Neighbor", but is it really there for all its California policyholders, 20% of all California homes?

Homeowners in Pacific Palisades, and Altadena have a laundry list of grievances, so much so, that the Department of Insurance says it will investigate.

Local perspective:

Harvey Rosenfield, Consumer Watchdog, attorney and author of Prop. 103 that has protected consumers for 40 years, sees the investigation as a delay tactic.

"That process is designed to protect these insurance companies. It's secret. It's behind closed doors. It takes years. It's not going to do anything to help survivors get their claims paid," said Rosenfield.

Policyholder grievances include delayed payments, denials of smoke damage claims, frequently changing claims adjusters, bad claims management and poor record keeping.

"You go to collect and they give you a hard time to avoid having to pay your claim," said Rosenfield.

Satisfied customers?

State Farm, insurer of one in every five California homes, wrote this response to KTVU: "A fair review will find that thousands of State Farm customers are being helped by our teams on the ground in Los Angeles County and are very satisfied."

In fact, State Farm claims the company has already paid out just under $4 billion to 12,000 customers as of this week.

A pending emergency rate increase request from State Farm to asks for and average increase of $600 per customer. "I would like to see personally an expansion of the existing bad faith laws against insurance companies," said homeowners attorney Dan Veroff.

Veroff says other states, including Washington and Colorado, have laws that assess triple damages penalties on insurers for undue delays and denials. "If you can't get adequate insurance, you can't get a mortgage and if you can't buy insurance, usually you can't buy a home," said Veroff.

Attorney Vernoff also says The Department of Insurance's so called Sustainable Insurance Strategy is flawed in many ways including under-insuring homeowners.

"What are we gonna get in exchange for allowing those rate hikes? We also don't have enough guarantees that if folks harden their homes, reduce fire risk that they are seeing their coverage costs that match their investment," he said.

Homeowners, you're paying for it.

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