Fire victim can probe insurer payouts, judge says

State Farm’s push for higher premiums now faces review of claims handling practices.

- By LAURENCE DARMIENTO

A HOME that appears to be untouched by the Palisades fire is seen through a burned-out residence Jan. 11.

Policyholders critical of State Farm General's response to January’s firestorms won a court victory this week when a judge ruled a Pacific Palisades homeowner can probe the insurer’s claims handling practices during a rate hearing.

In doing so, Administrative Law Judge Karl Fredric Seligman denied a motion by the Department of Insurance to move an inquiry into the insurer’s claims practices by Merritt Farren, whose home burned down, to a separate hearing after the rate increase is first considered.

“The outcome could easily result in chaos and challenges on numerous grounds that would only operate to cause delay,” the judge wrote of the department’s motion in his Wednesday ruling.

State Farm is seeking to raise its homeowner rates 11% after receiving an emergency 17% hike in May from Insurance Commissioner Ricardo Lara, who adopted a decision by Seligman that the insurer deserved the hike given its weak financial position even prior to the fires.

State Farm also is seeking increases in other lines of property insurance.

The insurer said this week it has received more than 13,000 claims and paid over $4.5 billion to policyholders. State Farm has said it expects claims payments to top $7 billion from the Jan.

7 fires, but losses under $700 million due to reinsurance agreements with its parent company. State Farm contends an “overwhelmingma-jority” ofits local policyholders are satisfied with its services.