State Farm General, the largest insurer in California, stands accused of orchestrating a “multi-faceted illegal scheme” to underinsure California homeowners in an effort to grow its market share, according to a lawsuit brought by Los Angeles wildfire survivors.
In a complaint filed Monday with the Los Angeles Superior Court, attorneys alleged State Farm’s California subsidiary and one of its agents “deliberately” misused reconstruction cost estimation programs to undervalue how much its policyholders’ homes would cost to rebuild after a disaster. That allowed them to offer cheaper policies while deceptively marketing those policies as providing “100% replacement cost” coverage.
The tactics formed part of a “race to the bottom” pricing strategy, through which State Farm captured more than 20% of the California insurance market, according to the complaint…