State Farm pays out nearly $500 million in California wildfire claims

Over 10,000 claims processed for home and auto damage as wildfires continue to impact Los Angeles

State Farm pays out nearly $500 million in California wildfire claims

Catastrophe & Flood

By Kenneth Araullo

State Farm said that it has paid out close to $500 million in claims following the wildfires that have ravaged the Los Angeles region. As of Jan. 27, the company has processed a total of 10,100 claims for home and auto damage resulting from the fires.

The Palisades and Eaton fires, which began on Jan. 7, are expected to lead to significant insured losses for the industry. According to Verisk, the combined losses for these two fires are projected to range between $28 billion and $35 billion.

The Palisades Fire alone is expected to account for losses between $20 billion and $25 billion, while the Eaton Fire’s losses are anticipated to fall between $8 billion and $10 billion. Residential, commercial, industrial property, and auto losses are estimated at nearly $28 billion, as reported by Karen Clark & Co.

A spokesperson for State Farm said that most of the homeowners claims have been related to fire and smoke damage, with many claims also including requests for additional living expenses. These types of claims are typical for fire-related incidents. Automobile claims from the fires are significant, with many vehicles being totaled due to the extent of the damage.

"We expect these numbers will continue to rise as residents return and assess damage, and we will continue to process claims for our customers," the company said in a report from AM Best. "We’ve made successful voice-to-voice contact with over 95% of customers who have filed homeowners claims."

State Farm insures approximately 250,000 homes and 880,000 automobiles in Los Angeles County alone. Across the state, the company covers more than 1 million homes and 4 million vehicles, representing billions of dollars in exposure.

A recent analysis of 11 years of data from insurers writing homeowners multiperil coverage in California revealed that the state has seen intermittent years of significant losses. Over this period, the combined underwriting losses for most insurers writing homeowners policies in the state have been substantial. These losses have resulted in an aggregate 11-year underwriting loss for the majority of insurers in California.

On a national scale, insurers in the U.S. collected $1.2 trillion in homeowners premiums over the past 11 years, paying out about $1.1 trillion in claims and related expenses. These figures include coverage for homeowners in California.

In California, 37 insurers paid out more in claims and expenses than they received in premiums over the 11-year period, while 23 insurers collected more than they paid out.

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