Alameda County DA sues Farmers Insurance over ‘widespread scheme’ to underinsure homes

Alameda County District Attorney Pamela Price speaks during a press conference in Oakland, Calif., on Wednesday, Nov. 8, 2023. Alameda County District Attorney Pamela Price is suing Farmers Insurance over an alleged “widespread scheme” to underinsure homes across California.

“The relationship between an insurer and the homeowner is necessarily one of unequal knowledge, expertise, information, and bargaining power, with homeowners depending on the insurance company to act in good faith,” Price said in a statement this week. The complaint against Farmers, filed last month in Alameda County Superior Court, did not name any victims of the alleged scheme. A spokesperson for Price declined to answer questions about the suit. It was unclear why the district attorney’s Consumer Justice Bureau singled out Farmers in the complaint.

To quell the unrest, state regulators have embarked on a yearlong overhaul of home insurance rules and pricing. The goal is to allow providers more latitude to raise premiums to account for the threat of climate change while extracting commitments to extend coverage in fire-risk areas. Price took aim at the software that companies use to calculate the estimates, alleging it relies mainly on general information like a property’s zip code. Her office alleged using the software to generate lower cost estimates saved the companies $44 million over a year.

Source: Insurance Report (insurancereport.net)

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