Allstate, State Farm sued over $4B Maui fire settlement
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(Bloomberg) –A half-dozen Maui wildfire victims sued a group of insurers, including State Farm and Allstate, accusing them of throwing a wrench into a tentative $4 billion deal to settle their claims.
The lawsuit filed Friday in state court in Maui targets insurers who wrote homeowners’ policies for demanding almost $2 billion from the settlement fund as reimbursement for claims paid out for destruction on the island last year. Bloomberg News reported on the proposed deal Thursday. The blazes damaged or destroyed 2,207 structures — the majority of them residential.
“This action arises out of the greed of Hawaii’s insurance industry to put their own selfish profits ahead of the suffering of the people of Maui who are the true victims of the Maui fires,” according to the lawsuit, filed by lawyers for homeowners and business owners.
The proposed accord — which still awaits final approval — would resolve lawsuits on behalf of thousands of residents against Hawaiian Electric Industries Inc. and other companies blamed for causing the fires, which killed 102 people and reduced the historic town of Lahaina to cinders.
Read More: Hawaiian Electric Among Firms in $4 Billion Maui Fire Deal
Officials of Bloomington, Illinois-based State Farm and Allstate of Northbrook, Illinois, didn’t return emails or calls for comment on Saturday. Mediators who helped put the settlement together set a Friday deadline for defendants to decide whether to finalize the settlement, but postponed that until next week, according to homeowners’ lawyers.
The proposed amount is below the estimated capital cost of approximately $5.5 billion caused by the fires, according to a damage assessment released last year.
In the lawsuit, homeowners accuse the insurers of improperly seeking reimbursement for claims paid out before their customers’ losses are covered. Under Hawaii law, insurance-policy customers must be “made whole” before insurers can demand reimbursement.
Insurers should be barred from recovering money from the “limited settlement fund before each and every one of their insureds – who are the only real victims of the Maui fires – has been fully compensated,” homeowners’ lawyers said in the suit.
Among the homeowners suing the insurers is Nelda Pagdilao, who lost her home and her husband to the wildfires. While Pagdilao received insurance payments under her policy, it didn’t cover her entire loss, according to the lawsuit.
The case is Nelda Pagdilao v. First Insurance Co. of Hawaii, No. 2CCV-24-0000659
