Homeowners Sue California Insurance Companies Over Alleged Wildfire Coverage Conspiracy

Allegations of collusion are emerging in the wake of the devastating Los Angeles wildfires, as two new lawsuits target some of California’s largest insurance providers. The plaintiffs allege that 20 insurance companies conspired to eliminate competition and force high-risk homeowners into the California FAIR Plan, the state’s insurer of last resort.

Filed on Friday, the lawsuits claim that insurers dropped coverage for homeowners in wildfire zones before the fires began, knowing they could funnel them into the FAIR Plan—a program known for higher premiums and significantly reduced coverage. Plaintiffs argue the move left thousands of residents financially vulnerable and underinsured.

“They knew they could force people into that plan,” said one of the attorneys involved, “and those people would face much higher premiums and much lower coverages.”

Alicia Kalvin, a homeowner in a wildfire-affected area, isn’t part of the lawsuit but shares a similar story. Her insurance company dropped her in July of last year. When she sought alternatives, she was repeatedly denied due to her property being in a fire zone.

“I was told by an agent that my only option was the California FAIR Plan,” Kalvin said.

Though her home is still standing, Kalvin says it is currently unlivable due to toxic ash contamination. She remains in limbo, waiting for clarity on rental assistance and repair timelines.

“I don’t know when I can start the repair process. I don’t know if my insurance will cover rental income. They were supposed to pay me on April 7, and they did not,” Kalvin explained.

The lawsuits come at a time when California continues to grapple with how to provide reliable insurance options in areas increasingly vulnerable to wildfires. The outcome of these legal battles could have wide-reaching effects on both insurance regulation and wildfire recovery efforts in the state.

This story was reported by Ryan Chandler for NBC News.

Explore more: NBCPalmSprings.com, where we are connecting the Valley.