Courtesy photo
By Earl Ofari Hutchinson
Contributing Writer
“So far my insurance company has been prompt in payments to me to begin damage repair.”
My cousin made that complimentary remark about his insurer as we stood in front of his partially burned-out West Altadena home two weeks after the massive conflagration. He also considered himself lucky and fortunate that his insurer had performed admirably, at least to date.
This is the first of a two-part series based on Earl Ofari Hutchinson’s forthcoming book, “A Tale of Two Los Angeles Wildfires — Separate and Unequal” (Middle Passage Press).
However, as he and I scanned the block and counted the homes that were totally destroyed, the dangling question was would other insurers do the same? Most of the homeowners on his block were African American.
There were two harsh facts that made the answer to this question problematic. One was that Black-owned homes were far more likely to have suffered major damage, if not a total loss, than those of white-owed homes. That made their costs to repair and rebuild far greater.
The other was that the Black victims in West Altadena faced the same dilemma that many other Black homeowners faced in the past and present. Namely, getting fair and equitable access and pricing for their home insurance coverage.
The widespread assumption is that every home must have homeowner insurance. That is a myth.
Millions of homeowners nationally are uninsured. A disproportionate number of them are Native American, Hispanic and Black. The majority were lower income.
A Consumer Federation of America study in 2024 found that uninsured property accounted for more than 7% of all properties in the country. The dollar amount totaled $1.5 trillion in property value that was unprotected. In 2021, a study found that the uninsured dollar total for Black-owned homes topped $200 billion.
The report concluded, “Being uninsured can foster deeper economic [insecurity] for millions of homeowners across the country, especially those with lower incomes, and it is an important contributor to racial inequality.” It further noted that being uninsured was yet another major contributor to increasing the racial wealth gap, as uninsurance disproportionately impacted Hispanic, Black and Native American homeowners.
The gravely troubling and persistent question was just how do insurers get away with dodging providing accessible and equitable priced coverage to so many minority homeowners, especially lower income homeowners? Numerous studies and testimonies from those in and outside the insurance industry provided an answer to that question.
They ticked off the many ploys and tactics that were used to slam the insurance coverage door shut for millions. Here was the checklist of the dodges compiled by the Consumer Federation of America.
Many insurers:
• Offer insurance policies with inferior coverage.
• Do not return calls or requests for information from consumers interested in getting policies.
• Impose different terms and conditions based on someone’s neighborhood.
• Refuse to write policies for homes in those neighborhoods.
• Refuse to underwrite buildings based on age, which often disproportionately impacts mostly Black neighborhoods.
• Require inspection reports in certain areas but not others.
• Provide fewer or inferior options compared to wealthier neighborhoods.
• And discourage applicants from applying for coverage in predominantly Black and Hispanic neighborhoods.
The problem of homeowner uninsurance and the ways insurers skirt providing coverage tell only the smallest part of the story in the fight for equitable insurance coverage for Blacks. The greater problem was home underinsurance. Black and Hispanic homeowners were far more likely to have an underinsured home. That was true for many homeowners in West Altadena.
A study found that nearly three-fourths of the homes in that area were underinsured. The operative term for those home insurers used was “severely underinsured.” Nearly 40% of the homes fell into that category.
Let’s put that in hard dollars and cents. The estimate was that on average it would cost a minimum of $1 million to completely rebuild a home that was completely destroyed.
Many Black homeowners in West Altadena were forced to face the same problems that other Black homeowners had faced in the aftermath of a natural disaster. Did they have adequate, or any insurance? Would their insurer fulfill their obligation to make timely and adequate payments to cover the cost of repair? Would they be able to make repairs on a speedy basis?
Then there was the larger question that many grappled with. Was it even worth the time, cost and effort to repair and rebuild their home?
There was certainly no shortage of developers, speculators and real estate interests who flooded the area with solicitations and made countless phone calls to many of the homeowners dangling cash offers to buy their property at sums far under market value. Many homeowners would be tempted to simply take the money, pull up their roots in the neighborhood and start over somewhere else.
There were no easy answers to the dilemmas Black homeowners in West Altadena faced. Unfortunately, nearly all of which stemmed from and compounded by the horrid history of biased insurer practices and policies that were still very much alive and well when a natural disaster struck.
Earl Ofari Hutchinson is an author and political analyst. His latest book is “A Tale of Two Los Angeles Wildfires — Separate and Unequal” (Middle Passage Press). He also is the host of The Hutchinson Report.
