Viewpoint: Claims Handling Breakdowns From LA Wildfires One Year on

It’s been more than a year since the Palisades and Eaton Fires in Los Angeles, and attorneys who work in first鈥憄arty property claims are still seeing a steady rise in disputes. That trend isn’t slowing down anytime soon鈥攖hese claims will continue moving from adjusters’ desks into legal disputes for at least another year or two.

Every claim is unique, but the same patterns keep showing up. Some carriers have handled these fires well, others far less so. This isn’t about calling out anyone by name; it’s about calling out the practices that are creating unnecessary conflict.

Slow鈥慠olling Total Loss Replacement Cost

California is one of the most expensive states in the country to repair or rebuild a home. The Pacific Palisades sits at the very top of that cost curve. So why did so many large carriers initially insist that rebuild costs would be far lower?

There are explanations for the practice鈥攏one of them good. What we’ve seen over the past year is a slow escalation of replacement allowances, creeping upward every several months at a snail’s pace. And then, almost on cue, at the one-year mark, many carriers decided they were done adjusting. No more increases. No matter what the market data or construction realities show.

This matters because California is an open鈥憄olicy state. A total loss doesn’t guarantee payment of policy limits; the loss still has to be measured. But in the real world, most policyholders are underinsured or just barely adequately insured. The idea that large numbers of Palisades or Eaton Fire homeowners were overinsured to the point that their rebuild costs need “heavy scrutiny” simply isn’t credible.

Carriers that are guilty of this almost certainly know, at the higher levels, that at best they were being hyper-conservative pending more data. So, tell the insureds that upfront. Set expectations. Explain that more adjustments are likely and tell them what the company is doing about it. Don’t be secretive and conceal context. And if delay on the carrier side slows the claim, compensate for that delay. Some carriers made an effort here; many didn’t.

Customer Service Is Still a Weak Link

Claims handling is supposed to be a customer鈥憇ervice function. Most adjusters want to help people. But when they’re undertrained or under鈥憆esourced, they end up saying the wrong thing鈥攐r saying nothing at all.

What we’re seeing now is the bare鈥憁inimum approach: communications that check regulatory boxes without actually informing anyone of anything. Letters that are sparse, vague and increasingly AI鈥慻enerated. Adjusters being rotated out mid鈥憇tream, destroying momentum and undoing progress. Agreements made by one adjuster and then unwound by the next.

When is the human aspect going to be put back into claims? Claimants are dealing with catastrophes, and their lives have been upended. Most of them are experiencing the worst time of their entire lives.

Applying Wildfire Science to Urban Firestorms Doesn’t Work

The smoke profile in the Palisades and Eaton Fires wasn’t typical wildfire smoke. These were urban conflagrations鈥攈omes, vehicles, plastics, batteries, and building materials burning together.

Different smoke means different contaminants, different risks and a need for different investigation standards. Communities know this, too. People are organized and data鈥憇haring, and they’re demanding real testing.

For years, carriers built strategies to resist smoke鈥慸amage claims in traditional wildfires. Those strategies do not fit these losses. Some companies adapted their scopes and testing protocols. Others are still trying to run the wildfire playbook in dense, urban鈥憌ildland鈥慽nterface neighborhoods, where the costs of proper cleaning and reconstruction are dramatically higher. The result is predictable: the wildfire playbook fails, and claims spiral.

It’s not enough for insurers to financially prepare through underwriting. They have to operationally prepare too. Adaptation is the difference between a resolved claim and a litigated one.

Daniel Veroff is a first-party property insurance attorney with Merlin Law Group, based in San Francisco, California. He represents policyholders in catastrophic loss disputes and complex coverage matters. Email: dveroff@merlinlawgroup.com.

Topics Catastrophe Natural Disasters Claims Wildfire Louisiana

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