State Farm to offer renewals to policyholders affected by L.A. County fires
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State Farm said Wednesday that it will offer renewals to residential policyholders affected by the Los Angeles County fires that it had previously planned to drop.
The decision applies to policies held by homeowners, owners of rental dwellings and residential community associations, which include condominium associations.
Before the devastating fires burned across Los Angeles, many homeowners learned they were losing their insurance policies. Some faced big increases in premiums that they couldn’t afford.
The figure includes roughly 70%, or 1,100, of the 1,626 residential policies still in place in Pacific Palisades’ primary 90272 ZIP Code — and thousands more in the neighborhood and elsewhere in the county. The offer does not apply to policies that had already lapsed when the fire started on Jan. 7.
The Department of Insurance said that among the thousands of policies State Farm had targeted for nonrenewal, more than 7,600 were in the Palisades fire zone. There were also 525 more in San Gabriel Valley’s Eaton fire and additional policyholders elsewhere.
It’s unclear how many of those policies had already lapsed when the fires began.
“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,” said Jon Farney, chief executive of State Farm Mutual Automobile Insurance Co., parent of State Farm General, its California subsidiary.
Farney made his remarks in an extended interview Tuesday before the insurer told The Times about the policy change.
Firefighters continued their battle against the devastating fires burning in L.A. County Wednesday. But as dangerous fire weather subsided, there was growing despair and frustration among residents desperate to see what’s left of their homes.
State Farm said in March that it would not renew roughly 30,000 homeowners, owners of rental dwellings and other property insurance policies. It also said it would stop offering commercial polices to apartment owners and not renew roughly 42,000 of those policies in place. Renter’s policies that insure a tenant’s belongings were not affected.
That decision by the Bloomington, Ill., insurer has drawn outrage given the enormous scale of the Palisades and other fires in Los Angles County, which have damaged or destroyed more 12,000 structures and killed more than two dozen people.
State Insurance Commissioner Ricardo Lara had urged insurers last week to suspend pending nonrenewals in the Palisades and Eaton fire zones. His spokesperson, Michael Soller, said the department was in talks with State Farm to get more details about the announcement.
“All eyes are on insurance companies right now, including mine. We are going to keep working to make sure everyone’s claims are paid fairly, quickly, and completely,” Lara said in a statement Wednesday in response to State Farm’s decision.
Lara also announced he had expanded the boundaries of a moratorium he issued last week that bars insurers from issuing new cancellation or nonrenewal notices for one year. It applies whether or not homeowners have suffered a loss.
The insurance commissioner does not have authority to suspend nonrenewals previously sent to policyholders.
Soller said that under existing law if policyholders were notified about a nonrenewal but the policy was still in effect and they experienced a “total loss,” State Farm is required to offer them two policy renewals anyway. However, that law does not apply to damages that are less than a total loss.
State Farm spokesperson Bob Devereux said that the policyholders in the fire zones would get one-year renewal offers and those with total losses would get two renewals, as required by law.
State Farm announced this week it will not renew 72,000 policies in California amid a tight insurance market.
The expansion adds 22 ZIP Codes to Pacific Palisades and Eaton fire zones, and for the first time protects homeowners living in the Hurst, Lidia, Sunset and Woodley fire zones.
In an interview on Tuesday, Farney said the company has received 6,300 residential and auto claims, making it the largest wildfire disaster State Farm has ever experienced. The company is the largest property and casualty insurer in the United States.
Insurance Commissioner Ricardo Lara has issued a one-year moratorium on home policy non-renewals and cancellations in the Pacific Palisades and the San Gabriel Valley’s Eaton fire zones.
However, he said it was too early to determine the damages, though at least one estimate has put them over $200 billion, which could exceed Hurricane Katrina and make it the most expensive disaster in the nation’s 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 called the company’s decision in March to not renew 72,000 policies very difficult, but said it was driven by calculations that State Farm could not afford to take on more risk due to the possibility of being overwhelmed by claims in a catastrophe.
“You have to manage the amount of concentration that you have and the financial risk that you have, so we are positioned to ensure that we can keep our promises,” he said.
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