Passage of SB 877 And SB 878 Would End Hidden Insurance Redlines And Delays
Los Angeles, CA—The latest episode of Consumer’s Watchdog’s podcast series, Smoke & Mirrors, highlights new legislative solutions to the troubling practices by major insurance companies that are leaving wildfire survivors underpaid, exposed to toxic contamination, and trapped in months of delays.
In episode 5, “Fighting Back,” Consumer Watchdog looks at two bills introduced by California Senator Sasha Renée Pérez that are aimed at increasing transparency and accountability. SB 877 would require insurers to disclose all versions of loss estimates, including internal revisions, and SB 878 would strengthen prompt claims response rules and impose a 20% interest penalty on delayed payments.
“Loss estimates should not be a mystery to policyholders, and people shouldn’t have to wait around to get paid because there is no incentive for insurance companies to make payments in a timely fashion,” said Justin Kloczko, the host and producer of Smoke & Mirrors.
Listen to Smoke & Mirrors today on your podcast platform of choice, including:
Without reform, insurers can continue to reduce payouts through undisclosed estimate changes, delay claims without meaningful financial consequences, and leave homeowners responsible for uncovering contamination and damage themselves.
In one case, Pasadena-area homeowner Rossana Valverde discovered that her State Farm insurer dramatically reduced their contractor’s estimate—cutting it from $68,000 to just $19,000—through a series of undisclosed edits that selectively removed critical cleaning work.
“They just went and made 58 pages of arbitrary redlines that cut it down to $19,000, when the ServPro original estimate was $68,000 to do the cleaning,” said Valverde. “And this was before we found out about the toxic chemicals that have been left behind that now require specialized cleaning.”
The edits offer a rare glimpse into a widespread but hidden practice of insurers quietly altering cleanup estimates before presenting final payouts to policyholders. In many cases, policyholders only see the final, reduced version.
Valverde will testify in support of the legislation before the Senate Insurance Committee in Sacramento on April 22nd.
The episode highlights how industry guidance suggests some contractors are even instructed not to share original estimates with homeowners.
“Insurance companies can’t just run interception on the cleanup process without a policyholder ever knowing about it,” said Kloczko.
In addition to undisclosed estimate reductions, wildfire survivors report prolonged delays in claims processing, sometimes lasting a year or more.
Altadena homeowner Claire Thompson says her claim hasn’t seen “any movement” a year after filing, despite documented toxic contamination in her home.
These delays can function as a pressure tactic, leaving families in limbo and increasing the likelihood they will accept reduced settlements.
“Eaton and Palisades wildfire survivors have learned that insurance companies do not have to deny a claim to devastate a family—they only have to delay it,” said California State Senator Sasha Renée Perez announcing the bills’ introduction.
A 2025 Department of Angeles survey of Los Angeles County fire survivors found that 55% reported insurance estimates far below actual rebuilding costs, and 57% experienced poor, inconsistent, or delayed communication.
Smoke & Mirrors uncovers a web of little-known subcontractors, unfair claims practices and unseen technology that facilitate claims delays, lowballed payouts and denials, and offers advice on what consumers can do about it.
Learn more about the series at ConsumerWatchdog.org/SmokeAndMirrors (opens in new tab).
