- Homeowners whose homes and possessions have been damaged or destroyed in a fire can pursue two options: the first is suing their insurance provider to demand coverage.
- The second option is for homeowners to pursue a claim directly against those who may be responsible for the fire.
- Pursuing a claim against a utility company for damages stemming from a fire believed to have been caused by the company is a complex factual and legal inquiry.
- Utility companies are often very willing to settle claims early on in the litigation process.
- An attorney must aggressively pursue an injured homeowner’s claim in the expectation that the company will either settle prior to trial, or in the hopes that the injured party will prevail at a full trial. Whereas a settlement frequently means a faster, and less stressful, recovery for the homeowner, a trial can result in a much more substantial financial recovery.
Recent wildfires in northern California have left thousands of Californians displaced, destroyed tens of thousands of acres of land, and have threatened to upend the economy of the entire state. For homeowners whose land or homes has been damaged or destroyed in the fires, many are asking who, if anyone, may be responsible for the cost of repairing and rebuilding their homes, and the additional costs of the emotional, financial, and other stress imposed as a result.
As a general matter, most homeowners turn to their homeowner’s insurance provider for coverage in the case of a natural disaster. Although most homeowner’s insurance policies cover for fire damage (even if the fire damage does not occur from an incident in the home), some homeowners who live in particularly fire prone areas, such as near a canyon, or near a desert, may lack sufficient coverage. In these cases, the homeowner would need to have purchased additional coverage (often at a significantly higher cost) to provide coverage in the case of fires. Not all insurance providers may have necessarily disclosed this lack of coverage (or the need to purchase additional coverage), so it is important to review the details of the policy to ensure the homeowner is protected. Moreover, after the recent outbreak of fires in California even prior to the most recent fires, some insurance companies simply ceased writing homeowners insurance policies in fire prone areas, or may have altered or dropped fire coverage without notifying the homeowner.
As a practical matter, however, even if a homeowner does have an insurance policy, and this policy does cover fire damage, the real fear is that insurance companies may be dealing with what could be billions of dollars of insurance claims resulting from the fires in a short amount of time. That can mean that, functionally, these companies may be simply unable to pay their contractual obligations, or may seek any opportunity to deny coverage for any reason. If a homeowner was violating any provision in their insurance policy (even unrelated to coverage under fires) at the time of the fire, the insurance company might seek this out as means to deny all coverage for any damages. For example, if the homeowner was hosting friends from out of town, was using a spare bedroom to rent out on Airbnb, was operating any manner of business from the home, had any manner of flammable or otherwise dangerous materials in the home, had done recent renovations without sufficient permits or informing the insurance provider, or was engaged in any similar activity, the insurance company may seek out these more minor violations to deny all claims.
If the insurance provider simply becomes insolvent and is unable to pay out all of the claims that it is contractually obligated to pay, it’s likely that homeowners will be left paying the bill. Moreover, even in an ideal scenario, homeowner’s insurance may simply not cover the entire scope of the damages suffered, which could include lost profits from a business, time off work, the cost of a hotel or other housing, increased medical care, and so on. Homeowners with particularly expensive items may find that they are unable to substantiate their assets in a way to ensure coverage, or may have been required to purchase additional coverage for items such as jewelry, expensive electronics, or expensive clothing.
Legal options for displaced homeowners
Homeowners whose homes and possessions have been damaged or destroyed in a fire can pursue two options: the first is suing their insurance provider to demand coverage. So long as the policy seems written in a way that would ensure coverage, the homeowner may have a fair chance at receiving compensation, at least up to the stated policy limits. However, as suggested, if an insurance company becomes insolvent, it may be functionally impossible to receive any compensation from these insurance companies, or the compensation may be limited to a portion of the stated coverage. Insurance companies may choose to go bankrupt in lieu of paying out claims, meaning that insured homeowners could ultimately receive pennies on the dollar of coverage, and only months or years after the fires.
The second option is for homeowners to pursue a claim directly against those who may be responsible for the fire. Increasingly, evidence suggests that power lines, transformers, or similar power equipment may be to blame for starting these fires. Homeowners may find that this option is both more lucrative, and may result in a faster recovery for their damages. This is because many utility companies responsible for power lines are insured against fire damage claims, such as those brought by injured homeowners. These utility companies are aware that their manner of operation leaves them particularly at risk for producing devastating fires. Moreover, in lieu of going to trial, utility companies are often very willing to settle claims early on in the litigation process because they fear that a trial will result in much more substantial recoveries for injured homeowners, and result in more litigation from other homeowners.
Pursuing a claim against a utility company for damages stemming from a fire believed to have been caused by the company is, however, a complex factual and legal inquiry. First, it must be established that the fire was actually a result of something that the power company did or failed to do: like improper maintenance on power equipment, or failing to clear vegetation growing against a transformer. Second, the power company must be shown to be legally negligent or otherwise in violation of a law: a challenging inquiry that only an experienced attorney can help to answer. Finally, an attorney must aggressively pursue an injured homeowner’s claim in the expectation that the company will either settle prior to trial, or in the hopes that the injured party will prevail at a full trial. Whereas a settlement frequently means a faster, and less stressful, recovery for the homeowner, a trial can result in a much more substantial financial recovery, with the added risk that the trial may not go in the homeowner’s favor.
The complexities, stress, and uncertainties involved in either receiving full compensation from an insurance provider for fire damages, or in pursuing a lawsuit against a utility company require the attention, skill, and experience of attorneys well versed in these disasters.