Los Angeles-A Group of Housing Owners of California faces insurance companies that say illegally coordinated to deny coverage to the areas prone to fire, leaving thousands of residents displaced drastically little insufficient while fighting for funds to rebuild.
Housing owners, many of whom were affected by the recent forest fires that set fire to Los Angeles, have filed a lawsuit claiming that California insurance companies colluded in a “disastrous conspiracy” to exclude the owners of high -risk housing from the insurance market.
The complaint, presented on Friday at Los Angeles County, accuses dozens of large insurance companies and their subsidiaries of collaborating in a “group boycott” of certain areas to eliminate competition and force home owners to the insurer of the last resort of the state, a program known as the Justo de California plan.
The demands name the largest domestic insurers in California, including State Farmers, Farmers, Berkshire Hathaway, Allstate and Liberty Mutual. None of them have provided a comment about the accusations.
The fair plan has its own reserves and is intended to provide basic insurance to residents who cannot find a policy through the private market. Although it was created by the governor and the legislature, and the State Insurance Commissioner has supervision, it is not a public program. Insurance companies appointed in the demand have and jointly operate the fair plan, offering terms that limit their risk and place a greater load for the insured.
“They knew that they could force people, dropping insurance, in that plan that had higher cousins and much lower coverage,” said Robert Ruayak, a lawyer for Larson LLP, the law firm presented by the complaint. “They realized that they could take this device, which is to protect consumers and turn it into something to protect them.”
Ruayak argues that insurance companies knew that they could limit their responsibility by directing those insured to the fair plan, which allows companies to recover up to half of their losses through premiums increases, by agreeing that no company would ensure high -risk areas.
“All these insurance companies participate in the Fair Plan of California. They possess and manage it. It is not a California entity, it is not even a separate entity … the only way in which this scheme would function is whether no one would collect a policy withdrawn at any price, in any term. And that is what happened.”
In recent years, millions have fought in recent years to buy property insurance, since companies have increasingly refused to offer coverage to people who live in high -risk areas, particularly because climate change has supercharged some natural disasters. An NBC news analysis in 2023 found that a quarter of all US houses may be at risk of a climate induced insurance clash.
California has been among the most affected by what some have called a “insurance crisis.” Meanwhile, the fair plan of the State has been subject to growing scrutiny and frustration of insurance and client regulators.
The plaintiffs request a jury trial and seek payment three times.
A separate class demand filed on Friday makes similar accusations.
