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News Stories

How Insurance Companies Take Advantage of Wildfire Victims

Tragically, this has been a catastrophic year for wildfires throughout the state of California. Several blazes have ravaged the area, leading to hundreds of thousands of acres burned, thousands of people displaced from their homes, and millions of dollars of property damage. With so many people reporting total losses, insurance companies are inundated with claims.

As a policyholder, you essentially pay your premiums in exchange for a promise to pay. Ideally, your insurance company will provide you with the amount outlined in your policy in the event that you need it. Unfortunately, insurance companies are for-profit entities, and each claim they pay out counts as a loss. To mitigate their losses, they often take advantage of victims and pay out less than a claim is worth.

In instances like the Camp Fire, insurance companies can take advantage because people are desperate to get a check and rebuild. Here’s how to know if your insurance company is trying to take advantage of you – and what you can do to prevent it.

1. Using Confusing Jargon

Insurance policies are some of the most confusing and obfuscating documents out there. In the wake of Hurricane Katrina, many insurers used obscure clauses to avoid paying out on claims altogether. To avoid this scenario, many states have enacted common language laws that require insurance companies to outline policies in more consumer-friendly terms. Still, insurance companies try to take advantage of policyholders by using their lack of technical knowledge to deny, reduce, or delay claims.

2. Causing Frustration and Delay

If they can’t deny claims outright, insurers can use delaying tactics to create frustration and confusion for wildfire victims. When a policyholder becomes frustrated with the claims process, he or she may be more likely to accept the first claim offer that comes their way, even if it does not accurately reflect the amount of damage a family suffered.

3. Offering a Lowball Settlement

Insurance companies are notorious for offering a first settlement that does not come near the amount of damages that a policyholder suffered. They think that since you don’t know what your claim is worth, they can convince you that the first settlement offer is the best you’re going to get. Always look at the first offer as a starting point for negotiations, not your only option.

What You Can Do About Insurance Bad Faith

Using tactics that ignore good faith and fair dealing is a violation of California law. Unfortunately, many policyholders don’t realize they’re getting the runaround. You can protect yourself and your right to maximum compensation by taking the following steps:

  • Documenting and saving everything related to your claim. This includes making an inventory of your possessions, saving all your receipts, and saving copies of all correspondence from your insurance company. Save copies of Uber rides, car rentals, hotel bills, rental costs, storage fees, groceries, restaurant bills, utility bills, and more. This can help you evaluate your claim fairly.
  • Hire legal representation. An attorney will represent your best interests and know the tactics that insurance companies use to bully victims. He or she can tell you if your claim offer is fair. Sometimes, getting an attorney involved is all you need to get your insurance company to take your claim seriously.

Large-scale disasters like California’s wildfires put insurers in the driver’s seat. Though they are responsible for thousands of claims, they also know that people are desperate to put their lives back together. As such, they may try to offer low settlements or use other tactics to take advantage of wildfire victims. Understanding these tactics and your legal rights is the best way to protect your right to maximum compensation under the law.