Underinsurance

Insurers such as State Farm, Farmers, USAA, and Travelers utilize software programs to project replacement cost of the homes they insure. That projected replacement cost is used by the insurers to set the Coverage A (Dwelling) limit for the policy. It is well-known in the industry that these replacement cost estimating programs systematically project inadequate replacement cost estimates. This means that insureds are left with too little insurance to cover their homes’ actual replacement cost after experiencing a total catastrophic loss. Despite knowing of these inaccuracies, insurers falsely market their program as projecting adequate replacement cost policy limits. Insurers also fail to inform their customers about known problems with the replacement cost programs. The rampant hazard of underinsurance continues unfixed, as tragically demonstrated by January’s Los Angeles fires (the Eaton Fire and the Palisades Fire). Homeowners will continue to be victimized until insurers are held accountable for their role in this underinsurance crisis. 

Because of this pervasive underinsurance crisis, the loss of real and personal property is often only the beginning of wildfire victims’ misery.  Many people believe they are properly insured, only to learn, when tragedy strikes, that they are not, or that they lack the wherewithal to fight with an insurer that is undervaluing their claim. Too often, these victims are left to deal with practices of their homeowner insurance company that leave them frustrated, confused, and ultimately underpaid. 

The San Francisco Chronicle, on April 2, 2025, published a comprehensive story documenting this crisis: A broken system is keeping California homes underinsured. Millions are at risk. It is worth reading. We are proud that Crowley Norman LLP began investigating and prosecuting lawsuits regarding this exact pervasive insurance problem in 2019, more than six years before this issue became publicly known. This work was a continuation of our firm’s 25-year history protecting insureds against insurance companies’ abusive practices.

That is when we step in to help. Wildfires can cause more than just property damage and you should be compensated for all your losses – physical, emotional, and financial.  At Crowley Norman LLP, our attorneys have the experience and knowledge to obtain the recovery you deserve.