The California Department of Insurance is facing a California wildfire lawsuit filed by two victims who say the agency didn’t protect residents from unsavvy out-of-state insurance adjusters.

The Sacramento Bee reported that the Department of Insurance is attempting to have the case dismissed because, in court documents, the agency calls the lawsuit an “attempt to manufacture a ‘crisis’ that does not exist.”

However, California Insurance Commissioner Ricardo Lara is in favor of a new law that addresses some of the lawsuit’s complaints, including the fact that out-of-state insurance adjusters are not educated to properly handle the state’s wildfire claims.

Senate Bill 240 requires unlicensed, independent insurance adjusters to read California’s regulations. The law and the pending lawsuit both came about after the 2017 and 2018 wildfires resulted in a large number of out-of-state and unlicensed insurance adjusters being responsible for wildfire insurance claims when most of the adjusters had never processed such a claim.

One of the plaintiffs in the lawsuit is Jon B. Eisenberg, a lawyer who helped write SB 240. He and friend Jeff Sengstack, who lost his home in the Tubbs Fire, filed suit after Sengstack said out-of-state insurance adjusters gave him incorrect and conflicting information regarding the loss of his home.

He told the Sacramento Bee that at least 10 different adjusters had handled his wildfire claim, and he alleges several were working illegally in California.

The state requires insurance adjusters to register with California’s insurance department and to be licensed unless the adjuster is an employee of a licensed agency or in the event of a state-declared emergency, an unlicensed insurance adjuster has to register with the department and work under the supervision of a licensed adjuster.

The California wildfire lawsuit alleges insurance companies lied about independent adjusters being employees to skirt state laws.

The adjusters allegedly told those who lost their homes that they would not receive full benefits if they failed to rebuild their homes in the same place. The adjusters also conveyed wrong time periods for insureds to collect both their replacement benefits and the benefits needed to accommodate their temporary living quarters.

Eisenberg told the Sacramento Bee that he lost a home in the 1991 Oakland fires. He decided to volunteer his services to several people who survived the Tubbs Fire.

Even though Eisenberg helped write SB 240 to require the education of future insurance adjusters, the California wildfire lawsuit was filed to correct the problems created by the mistakes of the past adjusters who messed with the Tubbs Fire victims’ claims.

The lawsuit says, “At issue here is the fundamental integrity of (the department), of former Commissioner (Dave) Jones and of current Commissioner Lara,” and alleges that the state’s insurance agency “has been complicit in a massive fraudulent scheme by insurance companies and adjusting companies.”

Eisenberg’s office is in Healdsburg, which was ordered evacuated on Saturday, Oct. 26, 2019, due to the encroachment of yet another wildfire, the Kincade fire. At the same time, Pacific Gas & Electric Co. planned to shut off power to 940,000 customers in the area because of wind gusts of more than 70 mph that could damage electrical wires and ignite new fires.

This article is not legal advice. It is presented
for informational purposes only.