Although California was below its seasonal average for rainfall, a set of winter storms hit the state this week. The California Department of Insurance ("CDOI") released in time a notice to all real estate and non-life insurance companies that provide homeowners and commercial property insurance to consumers in California about their obligations to cover mud events, especially in areas recently affected by forest fires.
Recently, the US Geological Survey (USGS) projected that areas damaged by wildfires are likely to be affected by debris flow events, such as mud, if storms hit California. However, most homeowners' policies exclude mud and debris flow events from their policies, however. But this does not mean that all clay slides are excluded. Similar to the reminders from the 201
Often insurance companies try to avoid coverage for damage caused by mudslides that wildfire was just a distant cause. However, as the CDOI Communication states, carriers should provide cover for mud and debris flow in areas where the recent forest fires occurred due to these events triggered by the previous forest fire. In the past, transportation companies have successfully argued in California courts that forest fires were only a distant cause of loss and that the main cause of the damage was clay slides – which are excluded under their policy. To make it unequivocally clear, California Insurance Code adopted section 530.5 with effect from January 1, 2019, which states:
If a loss or damage is the result of a combination of hazards, one of which is landslides, mud, mud or debris flow, coverage should be provided if an insured hazard is the most effective immediate cause of the loss or damage and coverage would otherwise be provided for the insured risk. Coverage shall be provided under the same conditions as would be provided for the insured risk.
Due to the extent of fire-scarred areas caused by the 2020 fires, the CDOI considered it important to remind carriers of their obligation to cover these losses.
If your insurer seeks to deny your claim to mudslides or relies on the effective nearby doctrine in its denial, contact Merlin Law Group for a free evaluation.