Maui wildfire victims sue insurers over proposed $4 billion settlement

A half-dozen victims of the Maui wildfires are suing a group of insurers including State Farm and Allstate, accusing them of trying to disrupt a tentative $4 billion deal to settle their claims.

The lawsuit filed Friday in state court in Maui targets insurers that wrote homeowners policies, seeking nearly $2 billion from the settlement fund as compensation for claims paid out last year for destruction on the island, Bloomberg News reported on the proposed deal Thursday.

The fires damaged or destroyed 2,207 buildings, most of which were residential.

“This action is a result of the greed of the Hawaii insurance industry to put their own selfish profits above the suffering of the people of Maui, who are the true victims of the Maui fires,” according to the lawsuit, filed by attorneys for homeowners and business owners.

Officials at State Farm in Bloomington, Illinois, and Allstate in Northbrook, Illinois, did not respond to emails or requests for comment Saturday.

The proposed agreement, which is still awaiting final approval, would resolve lawsuits filed by thousands of residents against Hawaiian Electric Industries Inc. and other companies blamed for the fires that killed 102 people and razed the historic town of Lahaina.

RELATED STORY: Efforts to finalize $4 billion settlement for Maui wildfires continue

(Following Thursday’s report by Bloomberg, Gov. Josh Green said in a statement to the Honolulu Star-Advertiser that some mainland parties to the lawsuit are asking for too much from the settlement, and that he insists more money should go to families affected by the fire that killed 102 people and destroyed much of the town of Lahaina, including about 3,500 homes and numerous businesses.

(“The settlement has not yet been finalized, but we are working 24/7 to reach a positive resolution as quickly as possible,” Green said.

(“There are a number of parties on the mainland who are simply demanding too much from the settlement, resources that I maintain should go to families affected by the fire,” Green continued. “I will personally call them out next week if they hurt the people of Hawaii or delay this agreement further.”)

According to homeowners’ attorneys, the mediators who brokered the settlement set a Friday deadline for the defendants to decide whether to make the settlement final, but that was pushed back until this week.

The proposed amount is below the estimated capital cost of about $5.5 billion that the fires cost, a damage assessment released last year showed.

In the lawsuit, homeowners accuse insurers of unfairly seeking reimbursement for claims that were paid before their customers’ losses were covered. Under Hawaii law, insurance policy customers must be “fully reimbursed” before insurers can seek reimbursement.

Insurers should not be allowed to recover money from the “limited settlement fund until each of their policyholders — the only true victims of the Maui fires — has been fully compensated,” homeowners’ attorneys argue in the lawsuit.

Among the homeowners suing the insurers is Nelda Pagdilao, who lost her home and her husband in the wildfires. Although Pagdilao received insurance benefits under her policy, it did not cover her entire loss, the lawsuit says.

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Star-Advertiser staff contributed to this report. The Bloomberg News story was distributed by Tribune Content Agency.