California
California home insurers that denied the most claims
The wildfires that have ravaged Southern California over the past week have wiped out entire neighborhoods, destroying and damaging thousands of homes in Los Angeles County. If analysts’ estimates of the damages prove correct, it could be the largest wildfire insured loss in United States history.
As insurance companies operating in the area expect a barrage of damage claims in the coming days and weeks, Newsweek looked at insurers that previously declined the most claims.
Why It Matters
The California Department of Forestry and Fire Protection, or Cal Fire, estimates that the Palisades fire, which was 19 percent contained on Wednesday morning, has destroyed 2,191 structures and damaged 397 more since it started on January 7. The Eaton fire, which was 45 percent contained as of Wednesday morning, is estimated to have destroyed 4,627 structures and damaged 486 others.
Experts expect the losses linked to the fires to be enormous. According to the latest estimates by forecaster AccuWeather, the total damage and economic loss caused by the fires could reach between $250 billion and $275 billion. That put the fires on track to be among the costliest natural disasters in U.S. history.
Many homeowners who lost their homes to the fires will count on their insurers to help them rebuild. A claim rejection might ruin their chance to get back on their feet after tragedy struck.
A man surveys the remains of his home destroyed in the Eaton Fire, on January 8. Some of the biggest insurers in California had the highest number of national claim denials in 2023, according to Weiss Ratings.
DAVID PASHAEE/Middle East Images/AFP via Getty Images
What To Know
Newsweek has looked at how many damage claims the biggest insurers in California for market share closed without payment nationwide in 2023, using the latest data made available by Weiss Ratings.
Los Angeles-based Farmers Insurance had the highest rate of closures with no payment at the national level of all insurers operating in California. The insurer, which according to the California Department of Insurance (CDI) had a 14.9 percent market share in the Golden State in 2023, closed a total of 257,189 claims across the country with no payment that same year—equal to 49.7 of all claims closed in 2023.
Two USAA affiliates had the second-highest rate of claim denials. USAA General Indemnity Co denied 48 percent of all claims closed in 2023 across the country, for a total of 273,994 claims closed without payment; USAA Casualty Ins Co closed 428,116 claims with no payment, also equal to 48 percent of all claims closed that same year.
Newsweek reached out to USAA for comment via email on Wednesday.
Allstate Insurance closed 893,407 claims with no payment in 2023 at the national level, equal to 46.4 percent of all claims the company closed that year.
In 2023, Allstate was the sixth-largest insurer in California, with a 6 percent market share in the state; USAA followed with 5.7 percent.
State Farm General, the largest insurer in California in 2023 with a market share of 21.22 percent, denied 37.8 percent of all claims closed that same year nationwide without payment, for a total of 29,624.
Farmers, USAA and Allstate all sell more policies out of state than State Farm.
Still, these companies’ denial rates were much higher than the national average. By comparison, home insurers across the country denied an average of 37 percent of claims in 2023, according to Weiss Ratings. Weiss Ratings is an independent rating agency founded in 1971.
What People Are Saying
Weiss Ratings founder Martin D. Weiss said in September 2024, when the 2023 report was released: “There’s nothing normal about these high denial rates. They’ve been creeping up steadily for nearly two decades and have now reached alarming levels, especially among some of the biggest providers in disaster-prone states like Florida and California.
“The public can’t even begin to cope with the property insurance crisis until both the industry and their regulators provide full transparency, a change in standard operating procedure that may not be possible without strong ‘Truth in Insurance’ legislation.”
A spokesperson for State Farm told Newsweek last week: “Our number one priority right now is the safety of our customers, agents and employees impacted by the fires and assisting our customers in the midst of this tragedy.”
A spokesperson for Farmers told Newsweek last week: “We are currently focused on assisting customers who are impacted by the devastating fires and strong winds affecting Southern California. Our specially trained Farmers Catastrophe Response Team members have already begun to provide assistance to customers and we are urging local residents to remain vigilant.”
A spokesperson for Allstate told Newsweek last week: “Right now, we’re focused on helping our customers recover and rebuild their lives. We’re supporting customers who have filed claims and have teams ready to move into California once it’s safe to help on site. Allstate policyholders affected by the wildfires can file their claim through the Allstate® Mobile app, online, by calling 1-800-54-STORM, or their local agent. We’re here for our customers.”
What’s Next
The scope of the damages caused by the fires is yet to be defined and will depend on when firefighters will manage to contain and extinguish the flames. Dangerous winds kept Southern California at risk on Wednesday, though firefighters have made progress against the blazes.
According to the National Weather Service in Los Angeles, winds will calm down later this week.