Maui Wildfire Victims Sue Insurers Over $4 Billion Settlement

Case Overview: Maui wildfire victims have filed a lawsuit against several insurance companies, alleging they are improperly seeking reimbursement from a limited settlement fund before the victims are fully compensated.

Who's Impacted: Maui wildfire victims who have received insurance payouts but whose total losses exceed the coverage.

Court: Circuit Court of the Second Circuit of the State of Hawaii

Victims of the Maui wildfires have filed a lawsuit against several of Hawaii’s largest insurance companies, alleging the insurers are improperly seeking compensation from a limited litigation settlement fund, before the fire victims have been fully compensated for their damages.

A series of wind-driven wildfires destroyed much of Lahaina on August 8, 2023, killing 102 people and causing about $5.5 billion in property damage. 

Afterwards, thousands of businesses and homeowners filed lawsuits against the island’s utility, Hawaiian Electric, its utility subsidiaries, the State of Hawaii, Maui County, Hawaiian Telcom, Spectrum Communications, and Kamehameha Schools. 

Maui wildfire victims fight for priority in $4 billion settlement

Last month, Hawaiian Electric and the defendants tentatively agreed to a settlement of more than $4 billion. However, a key sticking point remains unresolved: how to divide the settlement proceeds between insurers and fire victims.

Insurers have paid out billions of dollars in claims and have demanded reimbursement for these payouts before all individual plaintiffs are compensated, through subrogation lawsuits. Subrogation is a legal action that an insurance company takes to recoup the funds paid out in a claim from the at-fault party. 

In the lawsuit filed July 19, the plaintiffs argue that they, as the actual victims of the fires, should be fully compensated before insurers receive any reimbursement.

Insurers accused of profiting from tragedy, ignoring 'made-whole' doctrine

Central to the complaint is the “made-whole doctrine,” that says insurers cannot seek recovery under subrogation rights until all insured individuals have been fully compensated for their losses, the Honolulu Civil Beat reports. The plaintiffs claim that insurers have jumped ahead with subrogation lawsuits, motivated by profit, contrary to Hawaii’s made-whole doctrine.

“After having made $4.2 billion in profits over the past 10 years in one of the most lucrative insurance markets in the entire nation, Hawaii’s insurance industry seeks a ‘refund’ of payments they made to their premium-paying customers under contract,” the lawsuit alleges. 

Named as defendants are major Hawaii-based insurers, First Insurance and Zephyr Insurance. 

Heartbreaking stories fuel lawsuit against insurers

Seven plaintiffs are leading the complaint, which recounts heart-wrenching stories of several plaintiffs, including Nelda Pagdilao, who lost her husband and home in the fires.

Pagdilao’s insurer, First Insurance, paid up to her policy limits but not enough to cover her total losses, she alleges. “She lost her home where she raised her four children and their own young families,” the complaint says. “She lost her entire Lahaina community. Her husband, her home and her community perished in the Maui Fires.”

With the limited fund expected to be insufficient to cover all losses, any money insurers recover reduces the amount available for the actual victims. 

The plaintiffs seek to ensure that individual victims are compensated before insurers can claim any funds.

Case Details

• Lawsuit: Pagdilao v. First Insurance Co. of Hawaii
• Case Number: 2CCV-24-0000659
• Court: Circuit Court of the Second Circuit of the State of Hawaii

Plaintiffs' Attorneys

• Jesse Creed, Brian Panish (Panish | Shea | Ravipudi LLP)
• Anthony Takitani, Gil Keith Agaran (Takitani Agaran Jorgensen & Wildman, LLLP)

Were you or someone you know affected by the Maui wildfires and have concerns about your insurance claim? Share your story in the comments below.