Insurance Lawyer Blog

As San Francisco insurance attorneys, we know one of the most devastating loses is one’s home. When something takes away a home, everything is upended and we need our insurance providers to come to our aide quickly so we can move on with our lives. Unfortunately, that is often when insurance companies stall and engage in unscrupulous and illegal behavior.

This week, California insurance regulators under the Department of Insurance have filed three actions against an American International Group Inc. (AIG) owned subsidiary company, New York based New Hampshire Insurance Co, over how it handled claims from that 2008 Sayre fires that devastated over 11,000 acres in the Los Angeles area in what has been dubbed the worst loss of homes due to fire in the city’s history. On that horrible November day, 600 structures were destroyed, leading the Mayor of Los Angeles and the Governor of California to declare a state of emergency. At the Oakridge Mobile Home Park alone 480 mobile homes were totally destroyed, and New Hampshire Insurance covered 370 of them with Mobile Homeowners Policies.

In the months after the Sayre fires, the Department of Insurance received numerous complaints about the insurance company’s handling of claims and investigated those complaints. The Department eventually cited New Hampshire and another subsidiary, York Risk Services Group Inc, with 125 violations of the California Insurance Code with unfair or deceptive claims practices in failing to diligently handle claims. Each of these violations, if substantiated, would have a civil penalty of $5,000 per act, raised to $10,000 if the act was willful. Department general counsel Adam M. Cole stated to reporters this week that, "We expect insurers and their agents to be thoroughly diligent in handling claims, especially at times of devastation such as the Sayre fire. The allegations in this case reflect a troubling lack of attention to consumer needs by New Hampshire Insurance Company."

The Department of Insurance said it had issued an Order to Show Cause, a statement of charges/ accusations, and a notice of monetary penalty against New Hampshire and its claims processing subsidiary. New Hampshire Insurance is planning to contest these citations in an administrative hearing, but parent company AIG has not made any statements with regard to this issue.

This is not the first time the Department of Insurance has had to step in with the AIG-owned subsidiary over the Sayre fires. In 2009, the Department acted on complaints by consumers over how much extended replacement cost coverage was available under New Hampshire’s policies. At that point, the Department was able to get between 110 and 125 percent of the fire insurance coverage for most policyholders, which was an increase of approximately $10.8 million.

While this is good news, waiting for government agencies to sort out complaints dealing with delayed claims and file actions a year or more after the disaster may not be sufficient for some homeowners cheated by their insurance companies. A qualified San Francisco insurance attorney will be in your corner and focus on you specific case and circumstances to help you get what you deserve as soon as possible.

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Our San Francisco insurance lawyer knows that far too many local community members have found themselves in the nightmare scenario of paying for insurance for years only to find out the benefits, for whatever reason, are not available when a disaster strikes. Often a consumer finds out he or she does not have sufficient coverage or that there is an exemption in their insurance policy for something only when the damage is already done. And insurance companies are frequently guilty of confusing business practices, i.e. hiding an exemption in tiny print or legalistic language, or outright intimidation of uninformed consumers.

Fortunately, new rules are in effect now to help California homeowner’s insurance consumers (http://www.brodfirm.com/lawyer-attorney-1844610.html) avoid these kinds of nightmarish scenarios. The California Department of Insurance has put in place the new rules to help homeowners be more informed about their policies and keep consumers from being underinsured. Insurance agents and brokers do not have to help consumers come up with a coverage figure, but under the new rules, if they do, the number must be based in reality. The brokers and agents cannot make up a number or give you a random estimate. If the broker or agent gives a homeowner a figure of how much coverage protection they need for their home, that figure must be made on a concrete calculation. In addition and in conjunction with this, the agents and brokers are required to have specific and ongoing training to teach them to do these calculations.

Some insurance brokers and agents have already been doing this voluntarily, but the insurance companies are not happy with these new rules mandating this procedure if a coverage amount is given to a consumer. Naturally, insurance companies do not want to be responsible for telling consumers what coverage is needed. The current system works to the companies’ advantage and helps their bottom line—which is to make more and more money for their coffers, not to assist consumers in times of trouble if they can avoid it. The companies are so concerned with these new rules that law suits have been filed to overturn the rules, but so far the rules are still in effect.

Our San Francisco insurance attorneys often remind consumers that California has other protections for homeowners’ insurance consumers, as well. Insurance brokers’ fees must be fully disclosed and agreed to by the consumer up front and brokers are not permitted to be an agent of the company providing the insurance coverage. Homeowner’s insurance companies are only officially allowed to cancel coverage for nonpayment of premiums, fraud, material misrepresentations or physical changes to the property that make hazardous accidents more likely. Insurance companies are also limited in the rates they charge. Each company calculates rates based factors such as location, choice of deductibles, local fire protection, and the age and condition of the home. Once determined, these rates are subject to approval by the Department of Insurance, which seeks to ensure that rates are competitive and fair.

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