A majority of insurance companies in California have agreed to pay at least 75 percent of the contents coverage for homes that were destroyed in the recent Los Angeles wildfires — and will do so without requiring homeowners to provide an inventory of every object that was inside.
The pledges are in response to a request last month by the state’s insurance regulator for companies to pay up to 100 percent of the coverage without requiring victims to submit a room-by-room, shelf-by-shelf and drawer-by-drawer list of objects lost in the flames. The regulator revealed the responses from more than 60 companies on Thursday.
Though many victims will now get some relief, State Farm, which insures more homes in California than any other company, was among the companies that declined the request.
“The fact that State farm will not pony up is a huge problem, because they have 20 percent of the market. That’s deeply problematic,” said Douglas Heller, the director of insurance at the Consumer Federation of America.
In an emailed statement, State Farm spokesman Justin Tomczak wrote: “Advancing full policy limits with no inventory can lead to payments that exceed actual losses, raising the price of insurance for all California customers. State Farm handles contents inventory advances in accordance with California law.”
Other major national insurers, including Allstate Insurance Company, the Liberty Mutual Group and Travelers Group, also rejected the regulator’s appeal. Collectively, the companies that refused to pay without itemization insure over 39 percent of homes in California, according to data from the California Department of Insurance’s 2023 report on market share.
“We need insurance companies to meet this unprecedented moment and put money back into the pockets of wildfire survivors so they can rebuild their lives,” said Ricardo Lara, California’s insurance commissioner, in a statement on Thursday.
Consumer advocates have argued that requiring a full inventory, perhaps reasonable in the case of a partial loss, becomes unwieldy and unfair when a household has lost everything. The recent wildfires destroyed more than 16,000 structures around Los Angeles.
It’s a task that past wildfire survivors say can take as long as a year to complete, with spreadsheets spanning thousands of items, including ones as insignificant as the number of toothbrushes in a medicine cabinet.
A California law passed in 2020 already requires insurers to pay 30 percent of the dwelling policy without the need for itemization. In the wake of this year’s fires, the most destructive in Los Angeles’s history, Mr. Lara is sponsoring the “Eliminate The List Act,” legislation named after the title of a recent New York Times article, which would require insurers to pay 100 percent of coverage for lost belongings without itemization.
It is unclear if the proposed bill will have enough support to pass, and experts have warned that it will likely face pushback from the insurance industry.
Major companies like Farmers Group and the AAA affiliate for Southern California were among the insurance companies that agreed to the 75 percent pledge. The insurers that have agreed to the regulator’s request represent 54 percent of California’s homeowner insurance market.
Homeowners who have policies with companies that have declined to waive the itemization rule can still get the full amount, but will need to itemize their burned belongings — a provision that is in the fine print of most insurance contracts and forces policy holders to prove that objects that no longer exist amount to the coverage their insurer initially offered them. Once the list is submitted, and accepted, the insurer then depreciates the value of used items — a used $1,000 couch might only net a $250 check. To get the full amount, the customer then needs to purchase a new couch and submit an invoice, the beginning of a process that can last years.
“The insurer knows, as anybody knows, the more you shift the burden back to the survivor, the less you’ll have to pay because the person who just went through this traumatic, life-changing experience, who also suddenly has nothing, is in a position of utter vulnerability,” said Mr. Heller, adding that many homeowners simply give up, leaving money on the table.
Around Los Angeles, anticipation had been building as homeowners waited to hear how their insurance company would respond to the commissioner’s public notice, hoping that insurance companies would pay 100 percent of coverage, without itemization.
In Altadena, Calif., homeowners insured by AAA found one another on Facebook and WhatsApp after discovering that they had been offered the same thing: 80 percent of the coverage for their burned homes, without itemization. They have organized themselves into a bloc for the purpose of collective bargaining with their insurer, and sent an open letter to AAA last month saying that they stand to gain or lose between $50,000 and $75,000, a significant sum that will impact their ability to rebuild.
“Many of us had only minutes to escape our homes in the middle of the night,” read the letter signed by 70 policyholders, all of whom lost their homes. “Having to recount now, whether by memory or through photographs and discussions, all that we owned and accumulated over the course of our lives is deeply painful.”
Having to provide and verify the replacement cost of thousands of belongings is both “a tremendous burden and nearly impossible,” they wrote.
AAA did not respond to requests for comment.
In the past, insurers have said that they need the detailed inventory in order to protect themselves from fraud. But consumer advocates disagree, pointing out that insurers use sophisticated software to determine the value of the contents inside each home, with premiums paid based on those estimates. Expensive items like jewelry or fine art are capped at a few thousand dollars, unless the homeowner gets a special policy, for which they would pay an extra premium.
“If you had a Picasso, you would have to tell them about that, and get a separate rider for it,” explained Mr. Heller.
Andrew King, 39, a high school principal, said he has already filled out 1,800 rows in an Excel spreadsheet, representing as many items destroyed in his home in Altadena, and he is far from done.
“Honestly, I’m just sitting at my computer, closing my eyes and thinking to myself: What was inside the first top drawer underneath the coffee maker? And then I am just documenting, and I’m just like: a whistle, paper clips, gift cards,” he said, describing his effort to imagine every room in a house that no longer exists. “This is so hard for us fire victims.”
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