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Loss by Wildfire – How To Read Your Client’s Standard Homeowner’s Insurance Policy

Posted by on Nov 29, 2017 in News |

By – Michael J. Estrada, Esq.

At 5:00 AM on Monday, the 9th of October, Adela and I were forced to evacuate our home on Sonoma Mountain as the Pressley Fire, an offspring of the Nuns Fire, reached our neighborhood.  The fire burned to within 200 yards of our property before it was stopped.  We were lucky, but many, many others were not.  At least 44 deaths were caused by the Wine Country fires.  The State of California estimates that some 8,400 houses, out buildings, agricultural and commercial structures were destroyed.  Over 100,000 people have been displaced and one published report has total estimated insured losses for all California fires approaching $3 Billion.

In the wake of this catastrophe you may be asked to provide counsel as to what damage is covered and what is not covered under your client’s insurance policies.  I offer here a primer (or refresher), on some of the basics of standard homeowner policy language in the context of a wild fire loss.  This article is not to be taken as legal advice regarding coverage available or potentially available to any particular policy holder under a particular policy.  As I emphasize several times in this discussion, such coverage questions must be addressed on a case-by-case basis, with an appreciation of the specific facts bearing on each loss, the claims asserted by the policy holder and the complete terms of the subject policy.

This piece is, rather, intended to be an “issue spotting” aid for your policy review.  I briefly discuss the different types of standard policy forms covering single family homes, condos, mobile/manufactured homes, and renter’s insurance.  We’ll then move to a detailed review of a hypothetical claim for the loss of a home and personal property by wild fire, under the most widely sold standard homeowner’s insurance form (HO 3).

I do not address here loss to commercial or industrial structures or to farm residences; those properties are not covered by the homeowner forms.  Further, most homeowner’s insurance policies provide coverage for both First Party claims and Third Party claims.  First Party Claims implicate property loss suffered by the insured homeowner as a consequence of a covered natural event or another’s negligence.  An example of this would be a claim by a homeowner for the loss of his or her own house and contents in the recent wild fires.  A Third Party claim is one in which another person alleges that a homeowner is responsible for bodily injury and/or property damage sustained by the claimant.  An example of a Third Party claim would be a personal injury lawsuit brought by a guest against the homeowner for a dog bite injury inflicted by the homeowner’s pet.  This article focuses only on First Party issues that could be put in play by the fire loss; it does not address possible Third Party coverage situations.

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