Senator Schiff Confronts Insurance Companies as Victims Struggle with Claims

ByElena Carter

Senator Adam Schiff (D-Calif.) has called on California’s leading insurance companies to expedite coverage for Los Angeles homeowners whose residences remain uninhabitable due to smoke and fire damage from January’s devastating wildfires. The senator’s intervention comes as many survivors whose homes are still standing report significant delays in receiving payouts for living expenses and remediation costs.

In a letter obtained first by NBC News, Schiff demanded that insurers honor their obligations to policyholders affected by the Palisades and Eaton fires, which killed at least 29 people and displaced approximately 150,000 residents across Los Angeles County on January 7.

“My constituents expect their homeowners’ insurance to provide them peace of mind that they will have a safe place to live when unthinkable tragedies like the Palisades and Eaton fires occur,” Schiff wrote to 10 insurance companies, including State Farm, Allstate, USAA, and AAA.

Uninhabitable Homes and Rising Costs

While media attention often focuses on completely destroyed properties, thousands of Los Angeles residents face a different crisis – homes that survived the flames but are rendered uninhabitable by toxic smoke, ash, and soot. These homeowners now face remediation costs that can easily exceed $100,000, with many insurance companies delaying approval of work orders and rental expenses.

Andrea-Marie Stark of Altadena told NBC News that she’s been quoted between $80,000 and $100,000 to remediate her three-bedroom ranch-style house. Despite having coverage through State Farm, she expressed frustration over delayed approvals for the work, which includes pulling insulation from walls, removing harmful particles from all surfaces, and replacing contaminated furniture, clothing, and appliances.

“I’m worried I’m going to lose my place in line,” Stark said of the approval delay. “And then I could lose a place to live.”

The Los Angeles County Public Health Department has issued an advisory for people living within 250 yards of a burned structure or parcel, warning of increased risk of exposure to hazardous substances from debris, ash, and soot. The warning remains in effect until all hazardous waste and fire debris are removed.

Insurance Industry Under Scrutiny

Schiff’s letter specifically addressed insurance companies’ handling of Additional Living Expenses (ALE) benefits, which cover costs like temporary housing, food, and other necessities when policyholders are displaced. “My office is hearing from affected homeowners who are having difficulty accessing their ALE benefits until they can safely return home,” Schiff wrote, noting that some residents are being required to reapply for benefits every month.

The senator has requested that insurance companies provide more information about their claims processes and explain how they are following state requirements by March 14. This deadline puts additional pressure on insurers already facing public scrutiny.

In response to NBC News, State Farm said in an emailed statement that it is “committed to paying what we owe, promptly, courteously, and efficiently.” As of February 26, the company reported receiving more than 11,750 fire and auto claims related to the fires and paid nearly $2.2 billion to customers.

Similarly, Allstate stated it has paid more than $750 million to California customers since the fires started and is “working to resolve them with speed and care.” However, the experiences of many homeowners suggest a different reality on the ground.

The Gray Area of Smoke Damage

“It’s really tricky being in a home that did not burn down,” said Gaily Cowart, who is handling her mother’s smoke damage claim in Altadena. “There’s such a gray area with insurance thinking, ‘Just wipe everything down and it’ll be back the way it used to be.’ But it’s like, ‘No, I’ve got soot and ash that I can see with my eyes.'”

Cowart’s childhood home survived the flames but is surrounded by charred properties. Initial estimates to remediate the Spanish-style two-bedroom house started at $55,000, with additional costs for soil remediation, furniture replacement, and temporary housing potentially pushing the total above $100,000.

According to Rob Rhatt, an insurance analyst for Lending Tree, the reluctance of insurance companies to process smoke damage claims quickly is “frustrating and not surprising.” Unlike structural damage from direct flames, smoke damage requires professional testing and specialized restoration services from expensive outside vendors.

“These catastrophic losses have really cut into their profitability,” Rhatt explained regarding insurance companies. “It’s not just cutting into their profitability where they’re making less money, but it’s actually threatening their solvency to the point where they’re losing money insuring homes in California.”

California’s Insurance Crisis

The current situation highlights the broader insurance crisis in California, where major companies have been reducing their exposure to wildfire-prone areas. Last year, State Farm announced it would drop coverage for 72,000 houses and apartments, citing inflation, catastrophe exposure, and regulatory concerns.

Some residents, like Pacific Palisades homeowner Ian Hardcastle, never had the option to fully insure their properties. After purchasing his 2,600-square-foot home in 2021, Hardcastle could only obtain coverage through the California FAIR Plan, which provides basic insurance for those who cannot secure policies from private companies.

When the Palisades Fire filled his home with smoke and toxic ash, his adjuster quoted just $1,826 for remediation. With a $5,000 deductible, Hardcastle will receive no payout for work that experts suggest could cost substantially more.

“This little plot of land was our special happy place, so we’re happy it’s still here,” Hardcastle told NBC News as he toured his property. “We want to come back, but again, we don’t know when that will be.”

Psychological Toll on Survivors

Beyond the financial strain, survivors face significant psychological challenges. Stark, who works as a trauma-trained counselor, started a Monday night support group for residents whose homes are still standing, providing a space for people to discuss experiences few others can understand.

“Safeness is an internal feeling. Safety is external, and they’re both ruptured right now,” Stark explained. “I don’t want to express this to someone without a home, you know, because I don’t want to disrespect their experience and make them think that I’m not grateful. That’s called survivor’s guilt.”

For Marcie Habell, whose Altadena home is one of just two still standing on her block, the trauma is compounded by insurance complications. She can only tolerate being in her smoke-damaged house for a few minutes at a time and has been quoted upward of $22,000 just for toxicity testing.

“It’s insane that it happened, and then on top of it, the way that insurance is behaving just compounds the tragedy,” Habell said. “We are getting zero guidance from anyone for those of us who happen to have a standing home and are surrounded by the apocalypse.”

Scale of the Crisis

According to California’s Insurance Department, more than 33,710 insurance claims related to the Los Angeles-area fires have been filed, with nearly $7 billion in claims paid so far. These numbers highlight the massive scale of the disaster and the overwhelming burden placed on both survivors and insurance providers.

Michael Sollner, California’s deputy insurance commissioner, stated that “smoke damage is real and insurance companies must investigate claims properly, not deny them outright or pressure homeowners into accepting less than they are owed.” His statement underscores the official position that smoke damage claims deserve serious consideration and fair compensation.

As Senator Schiff’s March 14 deadline approaches, affected homeowners watch anxiously to see if his intervention will expedite their claims and bring relief to their disrupted lives. For many, the road to recovery remains long and uncertain.

Elena Carter

Elena is a seasoned political analyst who dissects elections, policies, and power plays with precision. Her expertise lies in breaking down legislation, campaign strategies, and the impact of political shifts on global markets.

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