In conclusion
It has taken more than a week for a cheque from California’s biggest property insurer, which claims to have paid billions of dollars in claims related to the fires in the Los Angeles area, to clear.
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Amelia McDonald was shocked by what she heard. After the Eaton Fire destroyed her Altadena house and ranch in January, she has been going through what she describes as a terrible process attempting to get State Farm to pay her claims. Since then, she has been displaced together with her father, daughter, and the goats that made it through the fire.
The insurer wrote her a cheque for $876,354.07, but it wouldn’t clear.
McDonald contacted Chase’s check-hold department on Tuesday to inquire as to why, over a week later, the money from the check she deposited on June 30 was still unavailable. She claimed that someone there informed her that the reason was that State Farm, the biggest property insurer in the state, didn’t have enough money. He informed her that the account actually had a negative balance.
Today, she called the same department and spoke with a representative who informed her that he anticipated the check to eventually clear on July 10. She insisted on knowing the specifics of the delay and requested to talk to a manager, who informed her that the funds had been placed on hold because the bank was unsure whether the check would clear.
“It’s extremely beautiful,” McDonald told CalMatters. I practice insurance defense law. I have almost 20 years of experience working for insurance firms. In my twenty-five years of practice, I have never had a check bounce to a claimant.
California’s biggest property insurance provider is State Farm. In a website update on Monday, it stated that it has settled over 13,000 claims related to the fires in Los Angeles County for more than $4.2 billion.
According to McDonald, “I sincerely hope they’re not in so much trouble.” We’re all in trouble after that.
In an emailed comment to CalMatters, a State Farm representative stated, “After review on our end, we see no indication why the bank would not release the funds to our customer.”
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State Farm declined to comment on McDonald’s communications with her bank or the claim of inadequate funding.
State Farm, which has canceled or declined to renew tens of thousands of policies in California, warned earlier this year that claims from the fires in the LA area would aggravate its financial situation and perhaps force it out of the state. The legislature granted legislature Farm an unprecedented permission to temporarily and urgently hike its prices in May. During a public hearing, the firm argued that its credit rating had been reduced and that its solvency, and consequently the policies of over a million California homeowners, were in danger.
State Farm is being sued in connection with the fires, including accusations regarding how it handled claims of smoke damage and charges that it underfunded policyholders on a routine basis. Additionally, the insurance department in California launched a formal investigation into the company’s claims handling practices last month.
According to insurance department representative Michael Soller, the state is looking into the McDonald’s claim with State Farm. Regarding the check-clearing delay, he would not comment. According to an email acquired by CalMatters, McDonald addressed the department’s insurance compliance officer yesterday regarding the delay, and the officer replied today that she had contacted State Farm and given the company five days to respond.
Although legally the check has just been placed on hold, attorney Amy Bach, who co-founded the consumer advocacy group United Policyholders over 30 years ago, said she had never heard of an insurer’s check bouncing.
“That’s frightening,” she added, adding that people need to be made aware of the financial realities of the massive claims resulting from the fires in Los Angeles.
According to lawyer Michael Bidart, who has represented clients in insurance disputes, he has also never heard of an insurer’s check bouncing. However, he noted, he has heard of insurers going bankrupt.
McDonald is awaiting almost $900,000 in order to cover her home and property. According to documents viewed by CalMatters, State Farm also sent her a cheque for $335,527.40 for the loss of items on her property. That check was deposited into a separate bank account by her. The check was cleared.
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State Farm wins first-ever emergency rate hike in California
L.A. fire survivors accuse State Farm of delaying claims. Should it get OK for a rate hike?
CalMatters has further information.
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