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4mo ago

USAA and AAA-Affiliated Insurers Sued for Underinsuring L.A. Wildfire Survivors

Last week’s lawsuits accuse the insurers of deploying flawed cost-estimation software that left homeowners with insufficient coverage, prompting regulators to prepare reforms to curb underinsurance.

The entrance to USAA’s corporate office in San Antonio. The company has been sued over the California wildfires.
Four California couples have sued USAA over the January wildfires. Shown is the Palisades Fire, which ravaged a neighborhood in the Pacific Palisades neighborhood of Los Angeles.
A sign from USAA can be seen in front of the remains of a home in the Pacific Palisades neighborhood of Los Angeles on Feb. 2. USAA, the sixth largest home insurer in California as of 2023, has been accused of underinsuring three families in Pacific Palisades and one in Altadena.
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Overview

  • Two lawsuits filed June 5 in Los Angeles Superior Court by Bentley & More LLP charge USAA, CSAA and the Interinsurance Exchange of the Automobile Club with systematically underinsuring wildfire survivors.
  • The suits allege the insurers continued using Verisk’s 360Value software despite prior regulatory findings that it underestimates rebuilding costs.
  • Policy limits set between $264 and $538 per square foot fell far short of rebuild estimates ranging from $800 to $1,400 per square foot.
  • The California Board of Equalization has conducted hearings on underinsurance and will issue recommendations for legislative and regulatory changes later this month.
  • Attorney Gregory Bentley said his firm will soon file similar lawsuits against other carriers over wildfire underinsurance.