Rep. Garamendi in the NYT: “The first commandment of an insurance company is, ‘Pay as little as possible and as late as possible’”
CALIFORNIA – A new investigation from the New York Times found that a year after the devastating Los Angeles fires in January 2025, families in Southern California are being forced to live in toxic homes as home insurers rely on outdated research, surface-level cleanups, inadequate testing, if it occurs at all, and industry-funded junk science, much like Big Tobacco. The practice has saved the industry an estimated $8.5 billion, while leaving California families with contaminated homes.
Eaton Fire survivor Elisa Jacobs Nixon is living exactly what the New York Times investigation uncovered in her battle with State Farm. “State Farm is minimizing the damage, challenging independent testing and reports, challenging our property claim recommendations for safe and effective remediation, conducting peer reviews of our reports, and delaying the process,” said Nixon, speaking on a call about a report released last month by Unlocking America’s Future (UAF). “We are living in a daily, exhausting, adversarial process that has become a second full-time job for me, and this has deepened the trauma. We need our regulators and our insurance commissioner to be there to protect consumers, not the insurance companies.”
Nixon’s experience reflects a broader crisis outlined in the UAF report titled “California’s Insurance Crisis: How Homeowners Pay More For Less While Insurers Profit.” The report reveals how major insurance companies in California have stopped writing many new policies and non-renewed more than 250,000 existing policies from 2020 to 2023 while claiming financial distress, even as the industry reports $164 billion in investment income.
Other wildfire victims whose homes experienced toxic smoke damage have faced denials and similar challenges when dealing with their home insurance companies.
“Home insurers have jacked up prices, denied coverage, and abandoned their policyholders after extracting massive profits for years,” said Unlocking America’s Future spokesperson Kyle Herrig. “State insurance commissioners and regulators have enabled this rampant abuse instead of protecting the families who need help the most.”
Unlocking America’s Future is demanding comprehensive regulatory reform, transparency, and accountability to protect homeowners.
See story below:
New York Times: How Did This Family End Up Back in a Toxic House?
- For nearly every house reduced to ash by the fires that blackened the Los Angeles sky last January, another was left standing but steeped in smoke, according to an analysis by The New York Times.
- These homes sit at an uncomfortable juncture: intact but potentially contaminated.
- Like most insurance policies in California, the Van Nesses’ contract with Farmers — the second largest home insurer in the state — covers smoke damage, but it doesn’t spell out how the damage should be repaired. That’s because there are no state or federal standards for how an insurer should remediate a smoke-damaged home after a fire. In May, the California Department of Insurance created a task force to establish such standards, but until its recommendations are announced, families like the Van Nesses are caught in a regulatory no man’s land.
- By contrast, the insurance industry is relying on what experts interviewed by The Times describe as outdated or incomplete research, endorsing cleanups based only on what can be seen and smelled. If insurers test at all, it is for a small subset of contaminants.
- Scale those numbers across the Los Angeles burn zone, and the math is staggering: Doing only a surface-level cleanup of the nearly 10,000 homes that likely had smoke damage would save insurers over $8.5 billion, according to a Times analysis using Cotality data.
- “The first commandment of an insurance company is, ‘Pay as little as possible and as late as possible,’” said John Garamendi, a Democratic congressman who represents Northern California and who was the state’s first insurance commissioner in 1991.
- In California, insurers began trying to limit payouts for smoke damage more than a decade ago, after a series of devastating wildfires, according to Dave Jones, a former state insurance commissioner who was the top regulator when carriers first started inserting policy language that excluded toxic smoke.
- When those exclusions were struck down in court, the carriers turned to something more subtle: They downplayed the science by relying on in-house experts, whose studies are often not peer-reviewed and whose methods are increasingly at odds with the emerging science of urban wildfires, according to interviews with two former insurance commissioners, insurance industry whistleblowers, attorneys and consumer advocates.
