Insurance is an enigma – we forgo money every month hoping we never make a claim because that means we have suffered extraordinary loss: lawsuit, illness, accident or worse. We buy insurance for safety, for peace of mind in the event of loss.
Our insurance practice has been active and successful since the 1993 Northridge Earthquake in which thousands of people had to fight to get claims paid protecting their largest asset – their home, despite having purchased earthquake insurance.
This office successfully recovered for hundreds of homeowners and reopened thousands of closed claims in the case styled 20th Century Ins. Co. v. Superior Court (Ahles) (2001) – 109 Cal. Rptr. 2d 611 (link to opinion).
Since Northridge, we continued our work with many cases involving water and mold damage cases, auto repair, burglary, theft and fire; The common theme is insurance companies cut corners, forcing insureds to sue to obtain the benefits of their insurance policy. Burglary, vandalism and graffiti are always crimes but not all fires are crimes – many are accidental and more importantly denial of insurance benefits must be based on affirmative proof and strict application of language, not speculation.
The “mortgage meltdown” caused many foreclosures and vacant homes which suffered vandalism. Most people don’t realize that when a dwelling is vacant for 60 days or longer vandalism is excluded under the “vandalism exclusion.” Major insurance carriers are abusing the “vandalism exclusion” by stretching its definition to include fire losses.
The typical vandalism exclusion “excludes vandalism or malicious mischief if the dwelling has been vacant for 60 consecutive days just before the loss.” Vandalism is a crime like robbery or theft – requiring criminal intent or malice. In 2015 the Court of Appeal sided with our office and consumers in Ong v. Fire Insurance Exchange (2015) 235 Cal.App.4th 901 (link to Ong). Ong’s rental home in Elsinore had been vacant and during cold weather a trespasser moved in and his “warming fire” went out of control, consuming the property. Since the fire was placed on a wooden floor, the insurance carrier denied coverage, claiming such a fire was “malicious,” within the definition of vandalism. In reversing the trial court, the court of appeal agreed with us, holding that “vandalism” means the willful destruction of property with a desire to cause harm – he was not a vandal, rather someone trying to keep warm. A 2017 case shows the industry has not given up characterizing accidental fires as vandalism in order to deny covered claims. Ms. Bullock retired to the Bay Area and kept her Fresno rental house insured with Allstate. While the property was under repair trespassers moved in and started a fire which the fire department concluded arose from their activity, was single origin and of unknown cause. Allstate immediately began investigating Ms. Bullock for arson and found nothing. 90 days later they got around to investigating the fire. The Allstate investigator saw that the passage of time and ongoing trespasser activity had altered the fire scene; Even though he could not determine the cause of the fire, he asserted it was arson. In an assault on common sense, Allstate stretched the definition of trespasser to vandal, and vandalism to arson; We think it’s a crime to manipulate words to deny needed benefits in time of loss – robbing the insured of money and robbing others of that peace of mind. We have accepted Ms. Bullock’s case (link to Bullock) and expect to find there was no vandal, no vandalism, no intent to burn (thus no arson) alternatively that arson is different from vandalism and therefore does not fit under the vandalism exclusion.