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California has an insurer of last resort for fire coverage, the FAIR Plan, which I explained in detail in a previous post, What Is The California FAIR Plan? In late 2019 in the wake of hundreds of thousands of non-renewals, California Insurance Commissioner Ricardo Lara ordered the FAIR Plan to start selling more comprehensive policies that cover more perils than just fire. The order was set to take effect in 2020. However, in December 2019, the insurance industry filed a lawsuit to bar its enforcement.…
Continue Reading California Court Blocks Insurance Commissioner’s Order That FAIR Plan Expand Coverage Options

Perhaps the most universally misunderstood aspect of insurance litigation in California is what the potential outcomes look like for the insured. Some policyholders fear the insurance company will tie them up in litigation for years and drain them emotionally, while others think a jury will swiftly award them tens of millions in punitive damages. The truth is somewhere in between. Insureds need their attorneys to help them understand the realistic outcomes. Insureds who misunderstand this early on will find themselves in trouble down the road when comes time to make the hard decisions.…
Continue Reading What Are the Risks and Rewards of a Bad Faith Lawsuit in California?

Wildfires have ravaged California the last several years. In addition to the devastation caused, the wildfires have also brought unfair property insurance terms and insurance carriers’ claim practices to light. Fortunately for California policyholders, the legislature has addressed some of these issues, which we have featured in prior blog posts. The California Assembly has already, in 2020, introduced some new legislation that will be friendly to policyholders. It is contained in Assembly Bill No. 182 and is summarized as follows:…
Continue Reading California Assembly Introduces More Policyholder Friendly Legislation

Our client owns a large food market. Last summer, it burned down. The client submitted a claim under his business insurance policy from Farmers. The insurance policy included several different types of coverage, such as Business Property, Business Income, Extra Expense, and more. The insured had insufficient insurance limits under his Business Property to replace everything needed to reopen the market. Thus, he sought coverage for those items under Extra Expense coverage. By the plain and clear terms of the policy, these items were also covered under Extra Expense. But Farmers found an excuse to wrongfully deny the claim in a textbook example of how not to interpret and apply insurance policies in California.…
Continue Reading Can Business Losses Be Covered Under Multiple Parts of Your Policy?

California is a beautiful state. When I was meeting with our California attorneys and staff at our holiday party, I mentioned that there are so many different and beautiful areas, it is no wonder California is our most populated state. Unfortunately, with wildfires, earthquakes, landslides, and floods, California has its share of insurance problems—especially a recurrent problem of homeowners finding they are underinsured and without sufficient policy limits after large scale catastrophes.…
Continue Reading Should Homeowners Policies Have No Policy Limits?

As amazing as it may sound, insurance brokers in California have no duty at law to their customers when procuring insurance to advise of adequate coverage. This includes giving a customer advice on what appropriate policy limits may be, what type of exclusions a policy may contain and appropriate additional living expenses or business income coverage limits. After the outbreak of numerous wild fires in California over the past few years, many insureds have found that they were grossly underinsured. Insureds are presumably asking the question: ‘Why didn’t my broker tell me I did not have sufficient insurance coverage to rebuild my home? Surely my broker must be liable, this is my broker’s only job.’ Unfortunately, in all likelihood, the broker is off the hook.…
Continue Reading Checklist for California Insurance Broker Negligence Claims

In 2019, Merlin Law Group’s California offices received calls almost daily from insureds who were “dropped” by their homeowners insurance company (i.e., non-renewed). The reason insurers are providing? Unsurprisingly: increasing risks of wildfires. In November 2019, Ricardo Lara, the California Insurance Commissioner, exercised his powers to place a one-year moratorium on cancelling insurance policies related to wildfire risk. Earlier in the month, Lara ordered the FAIR Plan—a quasi-governmental insurer-of-last-resort for people who can’t get insurance elsewhere—to sell the same kind of policies for which Californians once had no problem qualifying.1…
Continue Reading Has Your Homeowners Insurance Been Cancelled? What California’s One-Year Moratorium on Homeowners Policy Non-Renewals Means for You

Governor Gavin Newsom recently signed Senate Bill 240, which enacts new laws that regulate out of state independent adjusters. The law also addresses claim adjustment for declared emergencies. The new laws, described more fully below, became effective on October 3. 2019.…
Continue Reading California Enacts New Laws that Regulate Out of State Independent Adjusters and Address Claim Adjustment Obligations for Declared Emergencies

In California, a carrier’s bad faith liability includes conduct beyond what is set out in the Insurance Code (statutory) and the Fair Claims Settlement Practices Act regulations. Bad faith conduct is also expressed through case law. Some of this additional bad faith conduct is summarized below. Effectively communicating an insurer’s bad faith conduct is essential to resolving insurance disputes. When you see bad faith conduct, a best practice is to bring the conduct to the carrier’s attention and explain why such conduct is prohibited.…
Continue Reading Prohibited Insurer Conduct and Unfair Acts Expressed Through California Case Law – Another Quick Guide to Holding an Insurer Accountable

Californians have many questions after being non-renewed by their insurance companies and unable to find another company that will insure their properties. The losses from recent wildfires have caused carriers to scale back, and some have completely ceased writing insurance in several California regions.

The California FAIR Plan remains the only option for many of these Californians. So, what is the FAIR Plan?…
Continue Reading What Is the California FAIR Plan?