Woolsey Fire Burn Scar Area Suffering Mudslide Damage – Who Is To Blame?
As Malibu endured more emergency evacuations due to torrential rains Friday and Saturday, residents living in high risk burn scar areas are facing first time and/or additional damage due to mud and debris flow. We asked fire litigation experts Robins Cloud LLP to help us understand where the liability falls to help homeowners understand their rights during these weather events.
Do Insurance Policy Exclusions for Mudslides Exclude Coverage When a Fire Plays a Causal Factor in Causing a Mudslide?
Most property insurance policies contain exclusions for losses caused by mudflow, debris flow, mudslide, landslide, or other similar events. However, under California’s “efficient proximate cause” doctrine, these exclusions are not enforceable if the facts establish that a covered peril (fire) was a cause of the events.
The California Supreme Court has recognized that the efficient proximate cause doctrine is the “preferred method for resolving first party insurance disputes involving losses caused by multiple risks or perils, at least one of which is covered by insurance and one of which is not.” Insurance Code § 530 codifies the efficient proximate cause doctrine and states:
An insurer is liable for a loss of which a peril insured against was the proximate cause, although a peril not contemplated by the contract may have been a remote cause of the loss; but he is not liable for a loss of which the peril insured against was only a remote cause.
The case of Howell v. State Farm Fire & Casualty Cois instructive to property owners facing mudslide risks as a result of the Woolsey Fire. In Howell, the property owner made a claim for landslide damage to her property following heavy rains. The insurer denied the claim because the policy excluded coverage for earth movement and water damage. The property owner presented expert testimony that the landslide occurred due to a fire, which was covered under the policy and which destroyed vegetation on the slope the summer before the landslide. The Court found that because fire was the efficient proximate cause of the mudslide, the policy exclusion for damage caused by mudslide was not enforceable.
Following the 2017 Thomas Fire, and the subsequent mudslides that followed, the California Department of Insurance issued a Notice declaring the following:
Based on preliminary information evaluated by the Department, there is a substantial basis to indicate that the Thomas fire was the efficient proximate cause of the flooding, mudflow, debris flow, mudslide, landslide, and other similar events in Santa Barbara County following the Thomas fire. If it is established that the Thomas fire or another peril covered by the applicable policy was the efficient proximate cause of the damage resulting from these mudslides and other similar events in Santa Barbara following the fire, such damage is covered by the policy regardless of any exclusion in the applicable policy. Once the insured shows that an event falls within the scope of basic coverage under the applicable policy, the burden is on the insurer to prove a claim is specifically excluded. Garvey v. State Farm Fire & Casualty, supra, 406.
Based upon the insurance code provision and established case law described above, insurers should not deny these claims before undertaking a diligent investigation regarding the cause of loss and after carefully considering the facts.
Similarly, insurance carriers of Woolsey Fire victims should not deny claims for losses resulting from mudslides arising after the Woolsey Fire without diligent investigation. Given the widespread damage caused by the Woolsey Fire, it is likely that it can be shown that later mudslides were proximately caused by the Woolsey Fire. Therefore, policy exclusions for losses caused by mudslides would be unenforceable.
- Can Persons Sue Southern California Edison or Other Parties Responsible for the Woolsey Fire If Mudslides Damage their Property?
Many property owners have concerns about what options they may have if they sustain losses or damages from mudslides occurring after the Woolsey Fire. Can those without insurance, or those with insufficient insurance, pursue these types of claims against Southern California Edison or other third parties who may be responsible for causing the Woolsey Fire? The short answer is yes, provided there is adequate proof of causation.
Where a fire is a substantial factor in creating the conditions giving rise to the mudslides, the party responsible for causing the fire can also be held liable for losses and damages resulting from the mudslides. However, the viability of such claims will depend upon obtaining the necessary evidence to establish the claim. It is critically important that all evidence of mudslide impact is documented before any debris removal occurs. In addition, the correct team of experts should be engaged early in the process who have the expertise to evaluate the conditions which led to the mudslides occurring, and who are able to support the position that the fire was a substantial factor in causing the mudslides and the resulting losses and damages.