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Two lawsuits filed in Los Angeles allege that major home insurers are responsible for working with coverage in California communities with high risk of wildfires and enforcing homeowners to the state’s last resort insurance plan that offers basic coverage and high premiums.
According to one of the lawsuits filed last week, insurance companies, including 75% of California’s household insurance market, and 24 other companies, including 75% of California’s household insurance market, were part of an “illegal plan” in violation of California’s antitrust and unfair competition laws.
The lawsuit states that the company worked together in 2023 to “suddenly” drop or stop coverage “suddenly and simultaneously” in fire-prone areas, including neighbors such as Pacific Palisade and Altadena, destroying at least 17,000 structures and killing at least 30 people. This forced the fair plan as hundreds of homeowners offered $3 million limited cupping and struggled to rebuild after the fire as they were not insured.
Other lawsuits include all policyholders who have obtained a fair plan since January 2023, when the conspiracy allegedly began, the lawsuit states.
“Insurance is a product that homeowners hope never needs, but in normal times we rely on them for peace of mind and rebuilding after a catastrophe,” said Michael J. Bidart, representing homeowners, in a statement. “The complaint argues that by conspiring to support a fair plan, the defendant enjoyed the benefits of high premiums while robbing the report that he was prepared and willing to recover after a disaster like the wildfire in January.”
The lawsuit has caused businesses to raise interest rates, limit coverage and pull entirely out of areas susceptible to wildfires and other natural disasters as California suffers from an ongoing insurance crisis. In 2023, several major insurers suspended or restricted new businesses in the state. As Wildfires becomes more common and destructive due to climate change, it says it cannot truly price real estate risks.
New test results show that the lead levels of homes still standing near the Eton Fire site are high. Lolita Lopez is reporting NBC4 News on Wednesday, April 16th, 2025 at 4:30pm.
The American Real Estate Victim Insurance Association, the largest national trade association representing home, automobile and business insurance companies, said it is in compliance with the state’s antitrust laws and is monitoring it to ensure that it does the same.
“These cases will focus on reverse logic, advancing valueless claims and solving challenges in the California insurance market,” said Stef Zielezienski, the group’s chief legal officer.
The state Department of Insurance said it was not involved in the lawsuit, but its focus was on protecting consumers.
“Californians deserve a system that works. The decisions are made public, the rates reflect actual risks, leaving no one without options,” department spokesman Gabriel Sanchez said in a statement.
State Farm, California’s largest home insurance company, has a policy of around 1 million and did not respond immediately to requests for comment.
A fair plan is an insurance pool paid by all major private insurers. The plan issues policies to those who cannot get private insurance because their property is deemed too dangerous to insure. With high premiums and basic coverage, the plan is designed as a temporary option until homeowners can find permanent coverage, but more Californians are more dependent on than ever. As of March, there were over 555,000 housing policies for fair plans, more than doubled in 2020.
The complaint also alleges that the insurers were pushing policyholders into a fair plan, as they do not have to bear all financial liability to maintain the plan. When the state’s top insurance regulator ordered in February to provide insurers with $1 billion in fair plans to help pay claims related to the LA wildfires, he allowed them to recover half of the costs from policyholders across the state. Another lawsuit was filed last week to block cost shift restrictions.
California is in the process of implementing various new regulations to provide insurance companies with more latitudes in exchange for issuing more policies in high-risk regions. This includes regulations that allow insurers to consider climate change when setting prices and take over the costs of reinsurance to California consumers.
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