#USA #Los Angeles #Consumer Watchdog #Smoke & Mirrors #Verisk

Exploring Hidden Algorithms in Home Insurance

In a shocking new episode of the investigative podcast Smoke & Mirrors by Consumer Watchdog, listeners are taken into the intricate web of algorithms that many homeowners are unaware of and how these can drastically affect their insurance coverage and payouts. In episode three, host Justin Kloczko delves into the role of technology, particularly Verisk, and how it silently governs the home insurance landscape.

The Central Role of Verisk

Verisk is a technology firm that supplies home insurers with crucial services, including determining coverage limits and establishing the cost for rebuilding after a disaster. The three principal products it offers—360Value, Xactimate, and FireLine—are criticized for their lack of transparency. Kloczko argues that the reliance on these programs has resulted in many policyholders facing severe consequences, including being underinsured or their claims unfairly reduced.

Real-Life Implications

One compelling story features Barbara Holub, a Colorado homeowner who lost her house in the 2021 Marshall Fire. Her experience revealed a staggering underinsurance of $1 million, a direct consequence of the 360Value estimation algorithms used by her insurance agent. In another instance, Bill May, a resident of Pacific Palisades, has spent approximately $500,000 of his own money to rebuild after the devastating fires in 2025, all stemming from inadequate estimations provided by the Xactimate program.

Problem with Data Transparency

The podcast underscores the concern that the datasets used by 360Value often feature incomplete or outdated information, sometimes even manipulated by agents aiming to downplay a home's true value. These issues underscore a disturbing trend: insurance companies can use unreliable data to craft policies, ultimately affecting homeowners' financial security.

The Underinsurance Crisis

Around 75% of those who lost their homes in the Marshall Fire were reportedly underinsured, according to studies by University of Colorado Boulder and the University of Wisconsin-Madison. The economic implications extend beyond personal financial burdens; they indicate systemic issues in the insurance industry where competition among insurers leads to some companies routinely offering lower coverage than others. Kloczko emphasizes that homeowners' financial security shouldn't be contingent on the insurer they choose, yet that's often the case.

Closing Thoughts

The episode of Smoke & Mirrors serves as a wake-up call for homeowners, urging them to scrutinize their insurance policies and understand the implications of the often-invisible algorithms that dictate their coverage. The show also provides listeners with actionable advice on how to mitigate these risks and challenge unfair practices in the insurance landscape. Learn more about the series and its findings at ConsumerWatchdog.org.