Nation - California State says Farmers hasn't paid fire claims

LOS ANGELES (AP) -- A lawsuit filed Tuesday accuses Farmers Group Inc. of refusing to pay claims to policyholders whose homes were damaged by last summer's massive Station Fire near Los Angeles. The suit, which claims breach of contract and unfair business practices, seeks unspecified damages for more than 1,000 homeowners who reported smoke, ash and other damages from the blaze that killed two firefighters, destroyed 89 homes and scorched 250 square miles of Angeles National Forest. Farmers denied or minimized claims to boost its bottom line, said Brian Kabateck, an attorney for the plaintiffs, adding the average loss among homeowners named in the lawsuit was $25,000 to $50,000. "Once again, it appears Farmers has engaged in the egregious practice of denying or underpaying claims, simply to frustrate policyholders and discourage them from seeking the compensation they deserve," Kabateck said. Farmers spokesman Jerry Davies said he couldn't comment on the lawsuit because the company had not seen it yet. A phone message left for the state Department of Insurance was not immediately returned. Farmers and other insurers were accused of similar practices after the 1994 Northridge earthquake that killed 72 people and caused an estimated $15.3 billion in damage. Other insurance companies have paid claims for the Station Fire, Kabateck said. Farmers is accused of hiring biased consultants to deny or undercut claims as well as being unreasonable in its claims adjustment practices. "The result is that plaintiffs and defendants' other insureds are cheated of monies rightfully owed to them," according to the lawsuit. Russell Reed, 55, a plaintiff in the case who lives in Altadena, a community near the site of the fire, said he had damage to his home and a layer of ash and debris a foot deep in his pool that clogged drains and became a nuisance for weeks. Farmers agents came out a month or two after the fire and said he wasn't eligible to receive any money, Reed said. "I've been a good customer of Farmers for a long time," he said. "The one time we have a major catastrophe, Farmers doesn't want to assist me." Published: Thu, Aug 19, 2010

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