{"id":895206,"date":"2018-11-20T14:04:11","date_gmt":"2018-11-20T21:04:11","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=895206"},"modified":"2018-11-20T14:04:11","modified_gmt":"2018-11-20T21:04:11","slug":"california-wildfires-and-related-insurance-claims-show-no-signs-of-stopping","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/california-wildfires-and-related-insurance-claims-show-no-signs-of-stopping\/","title":{"rendered":"California Wildfires and Related Insurance Claims Show No Signs of Stopping"},"content":{"rendered":"

Lindsey Davis | Zelle LLP<\/a> | November 15, 2018<\/p>\n

\u201cWe can\u2019t stop and we won\u2019t stop.\u201d Is this the refrain to a Miley Cyrus song, the creed of the thousands of firefighters currently battling California\u2019s wildfires, or the mantra of the fires themselves? While any self-respecting Miley fan knows these are the lyrics to her hit \u201cWe Can\u2019t Stop,\u201d everyone who has seen the footage coming out of the California wildfires knows that the fires have been ferocious in their destruction, and the firefighters have been equally unrelenting in their efforts to contain them. Unfortunately, and fortunately, there is no wrong answer.*<\/p>\n

On November 1, 2018, the governmental\u00a0National Interagency Fire Center(\u201cNIFC\u201d)\u00a0predicted\u00a0that the potential for \u201csignificant wildland fire[s]\u201d was \u201cabove normal\u201d for much of California in the month of November due, in part, to pockets of \u201ccritically dry fuels,\u201d or the dried vegetation that feeds a fire. It took a little more than one week for NIFC\u2019s prediction to become a terrifying and destructive reality.<\/p>\n

In the span of just eight hours on November 8, the\u00a0Camp\u00a0and\u00a0Woolsey\u00a0fires began in northern and southern California, respectively. Approximately 9,400 fire personnel have worked tirelessly to try to contain the fires and limit the loss of life (both human and animal) and the destruction to property. Despite the heroic efforts of these women and men, the devastation has been staggering.<\/p>\n

According to the California Department of Forestry and Fire Protection (\u201cCAL Fire\u201d), the\u00a0Camp fire\u00a0has scorched approximately 140,000 acres in northern California. In addition to the tragic loss of at least 56 lives (with 130 people still unaccounted for), more than 8,750 residences and 260 commercial properties\u00a0have been destroyed. An additional 15,500 structures\u00a0remain threatened. While it is just 40% contained, CAL Fire has deemed the Camp fire the\u00a0most destructive\u00a0and\u00a0deadliest\u00a0wildfire in California\u2019s history. Prior to the Camp fire, California\u2019s most destructive wildfire was the October 2017 Tubbs fire in Napa and Sonoma Counties, while the deadliest California wildfire was the 1933 Griffith Park fire which claimed the lives of 29 people.<\/p>\n

The\u00a0Woolsey fire\u00a0has burned more than 98,000 acres in suburban Los Angeles. Preliminary estimates show more than 500 structures\u00a0have been destroyed. Although 57% of the fire is contained, an additional 57,000 structures\u00a0remain threatened. Trulia estimates that median home values in some of the areas impacted by the Woolsey fire\u00a0exceed $1 million.<\/p>\n

The Camp and Woolsey wildfires will undoubtedly result in significant sums of money being paid out by homeowners\u2019 insurers and commercial property insurers. In fact,\u00a0some estimate\u00a0that these fires \u201ccould cost the state, insurers and homeowners at least $19 billion in damages. . . . [and] could be on par with the type of destruction triggered by Hurricane Michael\u201d earlier this year in Florida. According to a November 12 report issued by Moody\u2019s Investors Service, its initial estimates indicate that homeowners\u2019 and business owners\u2019 insured losses from the Camp and Woolsey fires as well as the Hill fire in southern California will total between $3 billion and $6 billion. In releasing this estimate, which reflects both the size of the fires and the costs of rebuilding,\u00a0Moody\u2019s made clear\u00a0that this estimate will likely increase as the fires continue to burn.<\/p>\n

All of this is against the backdrop of an already very active and costly couple of years for wildfires in California. Indeed, this summer\u2019s Mendocino Complex fire, the largest wildfire in California\u2019s history, burned more than 459,000 acres. California\u2019s second largest wildfire, the Thomas fire in Ventura and Santa Barbara Counties, which burned more than 281,000 acres,\u00a0occurred in December 2017. These two fires along with the Tubbs and Carr fires have led to\u00a0more than $13 billion in payments\u00a0by property insurers since October 2017.<\/p>\n

And there is no reason to believe the risk of wildfires will decrease in the near future or the fires will be less destructive when they do happen. In fact, earlier this week California Governor Jerry Brown said that large wildfires are now the \u201cnew abnormal. And this new abnormal will continue certainly in the next 10 to 15 to 20 years. Unfortunately,\u00a0the best science\u00a0is telling us that dryness, warmth, drought, all those things, they\u2019re going to intensify.\u201d Chris Folkman, senior director of product management at risk modeler RMS,\u00a0agreed and explained\u00a0that \u201cforty percent of the new residential buildings built between 1990 and 2010 in California were in the Wildland Urban Interface, areas at the highest risk of wildfire.\u201d\u00a0Folkman said\u00a0the risk of wildfire is also exacerbated due to \u201cchanging climate, prolonged drought, high winds, and a firefighting philosophy of aggressive fire suppression that lasted for a century up until the early 2000s producing a legacy of burnable vegetation.\u201d<\/p>\n

We have\u00a0previously discussed\u00a0the issues and challenges first-party property insurers and their insureds may face in adjusting wildfire-related claims. Those issues include whether a policy\u2019s \u201cphysical loss or damage\u201d provision is triggered where the insured property is not damaged or destroyed by flames, but suffers smoke, dust and\/or soot damage. Specifically\u2014and depending on the policy language\u2014to the extent that the \u201cphysical loss or damage\u201d requirement is not met, coverage for business income losses may also be unavailable. Given the\u00a0mandatory evacuation orders\u00a0that were issued following the Camp and Woolsey fires, the issue of whether a policy\u2019s civil authority provision provides coverage for the income a business loses (even if the insured business itself incurred no physical property damage) will also likely be relevant.<\/p>\n

_________________________________________<\/p>\n

*Miley Cyrus\u2019 home was destroyed in the Woolsey fire. The Associated Press reports that Miley Cyrus and Liam Hemsworth have donated $500,000 to the Malibu Foundation through Cyrus’s Happy Hippie Foundation to help those affected by the fires.<\/p>\n","protected":false},"excerpt":{"rendered":"

Lindsey Davis | Zelle LLP | November 15, 2018 \u201cWe can\u2019t stop and we won\u2019t stop.\u201d Is this the refrain to a Miley Cyrus song, the creed of the thousands of firefighters currently battling California\u2019s wildfires, or the mantra of the fires themselves? While any self-respecting Miley fan knows these are the lyrics to her… Continue reading California Wildfires and Related Insurance Claims Show No Signs of Stopping<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false},"version":2}},"categories":[1],"tags":[],"class_list":["post-895206","post","type-post","status-publish","format-standard","hentry","category-insurance-estimates","entry"],"jetpack_publicize_connections":[],"yoast_head":"\nCalifornia Wildfires and Related Insurance Claims Show No Signs of Stopping - 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