this post was submitted on 05 Oct 2023
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Yep. I can only speak to my experiences that occurred over a decade ago. I will say that everyone was shocked at how relatively easy to deal with they were at the time. I imagine as wildfires become more common and hit more populated areas that insurance will refuse to pay out more often. In our case, it was the most expensive fire that had ever hit our state, since most previous ones had occurred in remote areas.
We were actually lucky that our house wasn't ruined because my parent's policy actually changed at midnight the night the fire destroyed the neighborhood. I can only imagine the insurance trying to get out of paying up in that scenario.
Usually for cases where insurance is not feasible because of increased risk of for example wild fires, the government steps in and an insurance pool is created to cover the costs of rebuilding and temporary relocation. But it happens only after insurance companies start to retreat more broadly. I assume they cannot stop paying out especially fire claims because the costs that need to be reimbursed are immediate and will be agreed to when the fire is being reported - which usually happens within hours. All in all it would be kind of dump of an insurer to refuse payout in a case like a fire. There either was a fire or there wasn’t. So not much room for push-back I would assume. But not a lawyer so I am just being hopeful here haha.
I think the most likely outcome is that they will remove coverage for wildfires, which would likely have to be purchased separately like flood insurance works today. You are correct that if it is covered by the terms of the insurance they pretty much have to pay out at that point, as it is a contractual obligation.
I wonder how much money it would cost them to fight the subset of customers who took them to court over refused payouts?
Like if they refuse to pay out 10 x $500,000 payouts, as long as the legal fees and fines they’d pay to avoid prison costs then less than $5m, they’re making profit on a policy of “deny every claim”.