Insurers colluded to limit coverage in California areas at high risk for wildfires, lawsuits allege

Source: CBS News/AP

April 22, 2025 / 4:33 AM EDT


Sacramento — Two lawsuits filed in Los Angeles allege major home insurance companies have colluded to limit coverage in California communities at high risk for wildfires and force homeowners onto the state's last-resort insurance plan that offers basic coverage and high premiums. Insurers, including State Farm and 24 other companies that hold 75% of California's home insurance market, were part of an "illegal scheme" in violation of California's antitrust and unfair competition laws, according to one of the lawsuits, filed last week.

The lawsuit said the companies worked together in 2023 to "suddenly and simultaneously" drop coverage or halt writing new policies in fire-prone areas, including in neighborhoods like Pacific Palisades and Altadena that were leveled in the January wildfires that destroyed nearly 17,000 structures and killed at least 30 people. That's forced hundreds of homeowners onto the FAIR Plan that offers limited coverage capping at $3 million, leaving them underinsured and now struggling to rebuild after the fires, says the lawsuit filed by a group of homeowners who lost their houses in the L.A. fires.

The other lawsuit includes all policyholders who obtained the FAIR Plan after January 2023, when the conspiracy allegedly began, the suit says.

"Insurance is a product that homeowners hope never to need, but rely on for peace of mind in normal times and for critical help rebuilding after a catastrophe," Michael J. Bidart, who represents the homeowners, said in a statement. "The complaints allege that, by colluding to push plaintiffs and so many like them to the FAIR Plan, the defendants have reaped the benefits of high premiums while depriving homeowners of coverage that they were ready, willing, and able to purchase to ensure that they could recover after a disaster like January's wildfires."

Read more: https://www.cbsnews.com/news/insurers-california-wildfires-collude-limit-coverage-lawsuits-allege/