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Losing your house in a fire is devastating, but having your insurance company renege on their promise to cover your loss is beyond the pale. But that is exactly what is happening all over California as increasing firestorms destroy happy lives.  For many the only option is to sue these insurance companies for bad faith – violation of the covenant of good faith and fair dealing.

From Lake Tahoe to San Diego, from Santa Cruz to Malibu the insurance industry is ducking and weaving in an attempt to deny homeowners the full replacement value of their home.

It is these Insurers who set the replacement value of your home in the first place.

The scam starts by insurance companies offering low premiums to homeowners as a marketing tool to get their business.To do so, the agents and/or companies undervalue the cost of the dwelling.  Then, when the catastrophe hits, the company refuses to pay the full replacement value of the home, much to the surprise of the victimized homeowner.

A recent survey by United Policyholders found that 75% of homes were undervalued by an average of $240,000 in the recent fires in San Diego and San Bernardino Counties.And only 46% of the victims had received offers eight months after the fire.

This is not a new problem.Insurance companies have been trying to get away with this fraud for years.

When Katrina hit New Orleans most, if not all, of the victims found they were underinsured.Moreover, the insurance companies began to utilize the small print in their adhesive contracts to avoid paying claims.

An “adhesive” contract is one in which the terms are dictated by one side and are not the subject of mutual negotiation.In other words, the companies “stick” you with their terms.

Fortunately the law is on the side of the victims.

Gigantic State Farm was held liable for $2.5 million for its bad faith in handling the losses of its insured.State Farm claimed that its contract provided protection against wind, but not water and it did not have to pay the homeowners claim.

A federal judge ruled that State Farm was liable for the damages and a jury awarded punitive damages to the victims for the bad faith actions of State Farm.

But was this insurance company contrite?Did it do the right thing for other victims?

No. Here is State Farm‘s response:

Robert Hartwig, chief economist for the Insurance Information Institute in New York, said before the jury announced its decision that a punitive damage award would be “distressing” for insurers. “It adds even more cost and more uncertainty to the other problems that already exist in the Mississippi homeowners insurance market,” he said.

Note to Mr. Hartwig:There is no uncertainty if you pay the rightful claims owed to people who acted in good faith.Nonetheless State Farm continues to argue that the result of this case will make it harder for them to “settle” future claims.

State Farm customers should not be settling for anything less than what they are rightfully owed.

The actions of the insurance industry have been so heinous that it forced one former U.S. Senator to see the light. Trent Lott a one-time political beneficiary of these companies lost his own house and vowed to fight the Industry to his dying day.It is unfortunate that it took a personal calamity to change the Senator’s views, but he joins the thousands of victims who must continue to fight their insurance company, even as much of their life remains in ruins.

There are several ways to get help.The California Department of Insurance will help investigate disputes with the companies.

United Policyholders will advocate for consumers and have a wealth of information regarding how to deal with your insurance company.

But the best way to fight these corporations is to have a strong advocate, your own personal lawyer to deal with these companies for acting in bad faith.

Victims should not have to fight for their own money. The insurance industry is in a position of power and many victims walk away with less than their due, simply because the process seems hard.  And given the complete destruction of their lives many victims are often not mentally or physically able to take on their insurance company.

So, if you are ever the victim of a fire, fight back. Don’t get burned after the fire.  Hire qualified legal counsel and insure your rights are protected.

As we know well, your insurance company is only a “good neighbor” if you never make a claim.

Free consultation.   Guaranteed confidential.

Call 1.888.777.1776.

Monday through Friday 7 am  to 9 pm Pacific; Saturday and Sunday 10 am to 9 pm Pacific.

Or email us.

All bad faith work is on a contingency basis: no recovery: no fees, no costs.

Delay can result in the permanent loss of personal injury rights.  Don’t put it off.  Call now.


Richard Alexander