OWNERS SEE BIAS FROM INSURERS
Some struggle with claims, feel treated unfairly by adjusters
When a pipe burst and flooded her home in 2018, Deonne Burgess knew the cleanup would be messy. What she didn’t expect was the scrutiny from State Farm, her home insurance provider.
A claims adjuster from State Farm sought to strike as many items as possible off a list of repairs from her home in Inglewood, a predominantly Black neighborhood in Los Angeles, Burgess said. The adjuster argued that State Farm should not have to pay to replace a door that was so damaged by the f looding that it no longer closed.
Burgess, the global payroll director of the Wonderful Co., which makes packaged foods like pomegranate juice and pistachio nuts, began to think that she was being treated with extra suspicion because she is Black. She told State Farm it was unlikely that policyholders in a White neighborhood would receive the same treatment. “It was right after the Malibu fires, and what I said was: ‘No one in Malibu would have to justify things like this,’ ” she said.
Burgess’ assertions “are without merit,” said Roszell Gadson, a State Farm spokesman. “State Farm is committed to a diverse and inclusive environment, where all customers are treated with fairness, respect and dignity.”
Burgess had no way of proving that her experiences with the
State Farm adjuster amounted to racism. After all, the same insurer paid out an auto insurance claim for her BMW 5 Series sedan, which was also ruined by the f lood; a different set of people handled it and there was not much to argue about. But Mark Young, the vendor hired by State Farm who arranged for her walls and f loors to be repaired, and Leonard Redway, the plumber whom Burgess hired to fix a broken pipe, said that Burgess was being treated worse than their White customers. Both of them are also Black.
Allegations of racism are often tough to prove, but especially so in homeowners’ insurance, where insurers have a lot of discretion and don’t always provide detailed explanations for why claims are denied. Since company representatives often verify claims and assess the credibility of a claimant through home visits, face-toface interactions and other measures, there can be room for bias.
While claims disputes are hardly uncommon in the industry, many Black customers say they feel treated unfairly because of their race — something that Jeff Major, a Manhattan-based public adjuster who haggles with insurance companies on behalf of policyholders over their claims, has witnessed in his line of work. “You can actually see a difference between a Caucasian family and an African American, Hispanic or Asian family,” Major said.
Insurers keep a tight lid on their policy sales and claims data. They have long argued that the size and timing of payouts, and the neighborhoods where claims are registered and addressed, are proprietary information, and sharing that data would hurt their ability to compete. They guard it so zealously that even most regulators don’t have detailed information about how insurers assess individual claims.
It can be hard to compel insurers to part with data, partly because they are regulated by states and not the federal government.
To assess the veracity of their customers’ claims, insurers send adjusters to meet face to face with claimants, giving companies wide discretion in determining the extent of the damage and which claims to label as potentially fraudulent.
Young, the vendor hired by State Farm to arrange repairs to Burgess’ home, has seen insurers lowballing other Black customers and lobbied on their behalf — even though his Los Angelesbased company, Valley Green, which specializes in fixing damaged homes, depends on insurers for business.
He fought on behalf of Langston Phillips, who almost lost his house during a fight with his insurer, Pacific Specialty. Three years ago, Phillips’ kitchen had f looded after a pipe burst, ruining portions of his three-bedroom home in Inglewood. An adjuster from Pacific Specialty determined that the company owed Phillips just over $11,000 in repair costs. Phillips’ contractor said his home needed far more extensive repairs.
Pacific Specialty asked Young to take a look. Young determined that the repairs would cost more than $33,000. A battle ensued, with Young siding with Phillips even though he had been hired by Pacific Specialty. Because of the dispute, even the sum Pacific Specialty agreed to pay Phillips reached him in increments, forcing him to move to a single hotel room with his two children while he waited for his kitchen to be rebuilt.
“We aim to pay claims as quickly and fairly as possible to bring the insured back to their pre-loss living standard,” said Kara Holzwarth, Pacific Specialty’s general counsel. “We find that water leak losses can be fraught with disagreement.” She said Pacific Specialty’s treatment of Phillips had nothing to do with his race.
After two years of fighting, Phillips gave up. Worried about losing the house, he moved back in and began to work weekends to pay for the repairs that he was doing himself. “I am bone tired,” he said.