Friday, April 11, 2025

10 Homeowners Sue FAIR Plan Over Alleged Nonpayment of Fire Damage Benefits

CITY NEWS SERVICE

The California FAIR Plan Assn. was sued Thursday by 10 homeowners in Altadena, Pasadena, Malibu and Pacific Palisades whose residences were damaged during the January wildfires, with benefits were wrongfully denied or delayed.

The plaintiffs’ Los Angeles Superior Court lawsuit alleges insurance bad faith and breach of contract. The plaintiffs seek unspecified consequential and punitive damages as well as unpaid benefits. The plaintiffs also are suing multiple CFPA member insurers, including State Farm General Insurance Co., Automobile Club Inter-Insurance Exchange and Allstate Insurance Co.

The plaintiffs’ quickly notified the CFPA of their losses, the suit said.

“CFPA unlawfully failed to investigate and timely pay wildfire losses suffered by its customers, leaving thousands of families stranded and unable to access the coverage they paid for and desperately needed to repair their homes and protect their health,” the suit states.

A CFP representative issued a statement regarding the lawsuit.

“The FAIR Plan pays all covered claims, including smoke claims, consistent with California law and its policy forms, which are approved by the California Department of Insurance,” the statement read. “The FAIR Plan’s current dwelling policy has been in use since 2017. Our policy and approach to direct physical loss is consistent with other insurers. Our policy, like many others, requires direct physical loss for there to be coverage.”

According to the suit, in multiple cases the CFPA “unreasonably failed to pay or delayed paying” the plaintiffs’ claims for policy benefits for repair of damage to their properties “predominantly caused by fire and/or other covered perils, for repair and replacement of fire-damaged contents, and for fair rental value for the period of uninhabitability.”

The CFPA knew that its actions violate the law because in 2021 the California Department of Insurance notified the CFPA that its alleged practice of denying claims for smoke damage caused by wildfires was illegal, yet the CFPA disregarded that order so as to underpay and cut off wildfire survivors, according to the suit.

The CFPA was created in 1968 as the state’s fire insurance provider of last resort. The CFPA does not underwrite insurance, but instead manages the FAIR Plan risk pool funded entirely by its member insurers.