Gallego Presses Insurance Experts on Home Insurance Hikes in Arizona

WASHINGTON, May 1 -- Sen. Ruben Gallego, D-Arizona, issued the following news release:

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Gallego Presses Insurance Experts on Home Insurance Hikes in Arizona

During hearing, Gallego highlighted the stories of Arizonans hit hard by rising premiums

WASHINGTON - During a Senate Committee Banking, Housing, and Urban Affairs hearing today on insurance and mitigation policies, Senator Ruben Gallego (D-AZ) pressed insurance experts on industry practices that raise costs for Arizonans and what they are doing to prevent scam artists from exploiting victims of natural disasters.

Gallego opened his questioning by highlighting unfair insurance practices that raise home insurance rates even on homeowners who have taken proactive steps to mitigate their homes from wildfire risk.

"I'd like to share the story of a senior living in Dewey-Humboldt, Arizona - it's a small town of fewer than 5,000 residents. In an effort to reduce wildfire risk, she carried out extensive mitigation work, including clearing trees and creating defensible space between shrubs. Despite these proactive measures, her insurance premium jumped from $1,450 to $4,500 a year," said Senator Gallego. "She's not alone. Across the state, people are seeing their premiums triple or quadruple, if they can find coverage at all. I have heard from people that they have had their coverage just dropped altogether."

Between 2021 and 2024, homeowners insurance rates in Arizona rose by 48%. Some homeowners in wildfire-prone areas are being dropped from their plansaltogether.

Gallego also raised concerns that insurers may be using natural disasters in other states, like wildfires in California, as an unfair justification to raise premiums in Arizona, a practice they are prohibited from.

Gallego also highlighted the rise of scams that exploit vulnerable homeowners after natural disasters. He pointed to a practice known as "assignment of benefits" fraud, where contractors convince homeowners to sign away their insurance rights and then disappear with the money, without making repairs.

"After major disasters, we often see an influx of fraudulent home repair contractors and scam artists pushing what's called an assignment of benefits, or AOB. In these cases, a third party convinces a homeowner to sign over their insurance rights and just takes the claims or just disappears with the money, leaving the homeowner without repairs," said Senator Gallego. "What are insurance companies doing to verify the legitimacy of AOB agreements and protect consumers from fraudulent actors, which also ends up driving premiums for everyone?"

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Original text here: https://www.gallego.senate.gov/press-releases/gallego-presses-insurance-experts-on-home-insurance-hikes-in-arizona/