Filed Under:Risk Management, Weather Risk

California Dept. of Insurance issues formal notice about wildfire claims

Insurers’ incorrect statements to fire victims led to action

Crystal Shore looks over the wildfire damaged neighbors home along Via San Anselmo in the Sylmar area of Los Angeles on Dec. 6, 2017. (AP Photo/Chris Carlson)
Crystal Shore looks over the wildfire damaged neighbors home along Via San Anselmo in the Sylmar area of Los Angeles on Dec. 6, 2017. (AP Photo/Chris Carlson)

In the aftermath of the Northern California wildfires, on Nov. 20, Insurance Commissioner Dave Jones directed the California Department of Insurance to issue a formal notice to insurers, licensed public adjusters and admitted carriers to make sure all claims adjusters assigned to wildfire claims, including those not licensed in California, are properly trained on the California Unfair Practices Act, Fair Claims Settlement Practices Regulations, and all laws relating to property and casualty insurance claims handling.

The guidance continues to be important as Southern Californians deal with wildfires in the Los Angeles area.

Related: Los Angeles 405 Freeway closes in rush hour as wildfires spread [photos]

On Oct. 13, 2017, Jones issued a Declaration of Emergency Situation in California due to the fires, which allowed insurance companies to use out-of-state adjusters to handle the large volume of claims resulting from the North Bay Fires and other fires. Recently, the commissioner said in a statement, his office has received feedback from wildfire survivors, public officials and others that some of the representations made by insurance adjusters conflict with California law.

“Helping residents start the claims process in the face of so many losses and claims necessitated extraordinary actions,” said Insurance Commissioner Dave Jones. “While getting claims settled is a priority, it must be done according to the laws in place to protect policyholders through a difficult process. I issued this notice to remind insurers that claims adjusters must be properly trained and process all claims according to California law.”

Misinformation is worse than no information

The Department of Insurance noted that several fire survivors provided examples of incorrect insurer statements, such as the following:

  • An incorrect time frame was provided to collect full replacement cost to rebuild. Policyholders were told they have between 6 and 12 months. In a state of emergency, as these fires were, policyholders have no less than 24 months under California law.
  • Fire survivors were advised that if they decide not to rebuild in the same location, the policyholder could not receive full replacement benefits. Instead, California law provides policyholders may choose to rebuild in the same location, a new location or purchase an already built home in another location.
  • Survivors were told their additional living expense benefit would expire in 12 months. Under California law, in a state of emergency, policyholders have up to 24 months.

Related: The trouble with estimating additional living expenses (ALE)

Consumers who need assistance or have questions regarding their policy or claim should contact the Department of Insurance hotline at 800-927-4357.

Any insurance claims adjusters with questions regarding the notice should call the Department of Insurance Licensing Hotline at 800-967-9331.

Related: California wildfires expected to cause record insurance loss, Aon reports


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