Allstate’s $4 Million Settlement for Premium Fraud Comes as Insurers Face Lawsuits for Abandoning Wildfire Victims
WASHINGTON, D.C. — A disturbing pattern of systematic exploitation by major insurance companies is emerging in California, with mounting evidence revealing how insurers inflate premiums while simultaneously avoiding legitimate claim payments. Allstate Insurance agreed to pay $4 million to settle a class action lawsuit after being sued for overcharging California homeowners by double-counting garage square footage when calculating insurance premiums. The settlement exposes a troubling pattern across the insurance industry: companies inflate premiums on the front end to maximize revenue, then turn around and deny legitimate claims when policyholders need help most. While Allstate was busy padding its bottom line by charging homeowners for phantom square footage, insurers across California were simultaneously telling wildfire victims with smoke-damaged homes to “pick up a broom and sweep” rather than honoring their coverage obligations.
“Allstate got caught overcharging California homeowners by double-counting garage square footage to inflate premiums, while other insurers abandoned wildfire victims. This is the insurance industry playbook: squeeze policyholders with inflated premiums on the front end, then deny legitimate claims when they actually need help. California families are paying more and getting less, and it’s time regulators crack down on this systemic exploitation,” said Kyle Herrig, Unlocking America’s Future spokesperson.
The Allstate settlement comes as ten California home insurers and the California FAIR Plan face lawsuits from policyholders over their refusal to properly investigate and pay for smoke damage cleanup following the Los Angeles fires. Despite a state regulatory bulletin explicitly stating that smoke damage is a covered loss under homeowners policies, insurers have stonewalled victims with damaged homes, forcing them to fight for coverage they already paid for. California homeowners deserve better than an insurance system designed to take their money and run when they need help most.
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