Even though California was running below its seasonal average for precipitation, a set of winter storms hit the state this week. California’s Department of Insurance (“CDOI”) timely released a Notice to all property and casualty insurance carriers who provide homeowners and commercial property insurance to California consumers about their obligations to cover mudslide events, specifically in areas recently impacted by wildfires.

Recently, the United States Geological Survey (USGS) projected that wildfire damaged areas are likely to suffer debris flow events, like mudslides, if storms hit California. However, most homeowners policies typically exclude mudslide and debris flow events from their polices though. But this does not mean that all mudslides are excluded. Similar to the reminders issued by the CDOI in 2018 following mudflows in Montecito in Santa Barbara County, the CDOI told carriers that if heavy rainfall in fire-scarred wildfire areas triggers a mudslide, under California’s “efficient proximate cause” doctrine (see Insurance Code section 530), a carrier should be liable for damages due to the mudslide because it is the wildfire (a covered peril) that is the proximate cause of the damage.

Often insurance companies will try to avoid coverage for damage caused by mudslides arguing that the wildfire was only a remote cause. However, as the CDOI Notice states, carriers should provide coverage for mudslides and debris flow in areas where recent wildfires occurred because these events were set in motion by the prior wildfire. In the past, carriers have unsuccessfully argued to California courts that wildfires were only remote causes of loss and that the predominate cause of the damage were mudslides – which are excluded under their policies. To make it unequivocally clear, California adopted Insurance Code section 530.5, effective January 1, 2019, which states:

If a loss or damage results from a combination of perils, one of which is a landslide, mudslide, mudflow, or debris flow, coverage shall be provided if an insured peril is the efficient proximate cause of the loss or damage and coverage would otherwise be provided for the insured peril. Coverage shall be provided under the same terms and conditions as would be provided for the insured peril.

Due to the scale of fire-scarred areas caused by the 2020 wildfires, CDOI felt it was important to remind carriers of their obligation to cover these losses.

If your insurer attempts to deny your claim for mudslide or relies on the efficient proximate cause doctrine in its denial, contact Merlin Law Group for a free evaluation.