Los Angeles Wildfire Victims Sue USAA, AAA Over Underinsurance Claims

In the wake of the devastating January 2025 wildfires in Southern California, multiple lawsuits have been filed by Los Angeles County fire victims against major insurers USAA and AAA affiliates, alleging systematic underinsurance that left homeowners unable to cover the full costs of rebuilding. Plaintiffs claim these insurers underestimated replacement costs by significant margins, sometimes offering payouts as low as a third of actual rebuild estimates, despite assuring customers they were adequately insured. The lawsuits accuse the insurers of fraud, negligence, and breach of contract, seeking damages and reforms to insurance practices, while highlighting long-standing issues with the cost estimation software and profit-driven underinsurance. Plaintiffs, including families from Pacific Palisades and Altadena, report that their insurance coverage failed to reflect the high costs of rebuilding luxury and fully remodeled homes destroyed by the fires. USAA disclosed paying nearly $1.4 billion in wildfire claims so far but stated it was reviewing the new lawsuits and could not comment on specifics. Meanwhile, AAA and other insurers have declined to comment on the pending litigation, which adds to an expanding legal and legislative response to California's wildfire insurance crisis.