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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?

Most homeowners are surprised to learn that almost all homeowners’ policies include exclusions for damage caused by sewage water originating outside their home. For example, if your city or county’s sewer main line backs up because of tree roots or debris and the sewage water backs up into your home, the resulting damage will not be covered, or if it is, may be subject to significant limits—often covering only $5,000 or $10,000 of damage. Given the scope of cleaning required in these events, this amount will likely not cover even the costs to clean up the sewage. What’s more, some policies even exclude backups on the homeowner’s own lateral lines. Insurers may offer policy endorsements for coverage at an additional cost, but as many homeowners shop based on price alone, they may not realize they lack the coverage until it is too late.…
Continue Reading Although Many Policies Exclude Sewer Line Backups from Coverage, What Is A Government Entity’s Liability Under Inverse Condemnation?

In California, the moment an insured obtains a repair estimate that exceeds the insurer’s estimate, the insurer must either pay the difference or adjust its original estimate. This rule is set forth in the Fair Claims Settlement Practices Act, 10 Cal. Code Regs. § 2695.9(d). Generally, whenever anyone makes an insurance claim, the insurance company will create a scope of work to repair the damaged property and an estimate of what that cost to repair is. The insurer’s estimate does not atomically mean that is the amount of the claim. An insured has the right to get his or her own estimate and the insurer is required to consider that estimate.…
Continue Reading Insurance Regulations Prohibit an Insurer From Just Standing By Its Repair Estimate When An Insured’s Estimate Demonstrates the Cost to Repair Is More – Another California Practice Tip

Many insurance companies thought they would have to pay no more than $5,000 for each California wildfire claim but are ending up paying hundreds of thousands if not millions.…
Continue Reading Now That Insurers Can’t Legally Enforce Their $5,000 Wildfire Smoke Damage Caps, What Have They Done To Make Up For Their Unanticipated Losses?

It is becoming more and more common that insurance companies are recommending and suggesting that their “preferred vendors” perform loss repairs. California offers insureds protection if they opt to use a preferred vendor. Under the Fairs Claims Settlement Practices Regulations, if an insurer recommends a vendor, the insurer is essentially required to guaranty that vendor’s work.…
Continue Reading California Regulations Require That an Insurer’s Preferred Vendor Return Property to Its Pre-Loss Condition – A Quick Guide to What You Need to Know