The aftermath of the ongoing Los Angeles wildfires has left countless homeowners grappling with devastating losses and innumerable questions related to insurance coverage. While the immediate focus has been on insurance claims arising from the fire damage, the wildfires’ impact on soil and mud – compounded by impending rainfall and numerous local flood watch alerts – poses additional problems for policyholders. This alert provides an overview of these issues, lessons from past disasters like the Santa Barbara mudslides in 2018 and actionable steps for policyholders to take to prepare for the next phase of recovery.
The impact of wildfires on soil and mud
Wildfires can drastically alter the composition of soil, creating hydrophobic (water-repellent) layers, which can last for months or even years after a wildfire. These layers prevent water absorption, increasing the risk of flooding and mudslides during subsequent rain events. In the Los Angeles area, the combination of steep terrain and wildfire-damaged soil has exacerbated these risks. For instance, the Pacific Coast Highway in Los Angeles has faced multiple closures in recent years due to mudslides following major wildfires, disrupting transportation and highlighting the severe impact of compromised soil stability in wildfire-affected areas. These closures serve as a stark reminder of the cascading effects that wildfires can have on both infrastructure and local communities.
A study by the U.S. Geological Survey reveals that post-wildfire landscapes are at their most vulnerable during the first two years after a fire. According to the California Department of Forestry and Fire Protection, nearly 37,000 acres of land have burned in Los Angeles County from the Palisades and Eaton fires alone, placing many neighborhoods in high-risk zones for debris flow.
For policyholders with total property losses, this means their land may now be compromised by hydrophobic soil, making rebuilding efforts more complex and expensive. For policyholders whose structures remain standing near the burn scars, ensuring there is sufficient insurance coverage for natural disasters caused by rain is crucial.
Impending rainfall: What it means for policyholders
California’s rainy season, which typically begins in late fall and extends through late April, presents a significant threat to wildfire-impacted areas. Anticipating the risks of mudslides, Los Angeles Mayor Karen Bass issued an executive order on January 21 to fortify burn areas and prevent the flow of toxic debris ahead of the approaching rain.
For policyholders whose homes have been reduced to soil or debris by the wildfires, this creates unique challenges:
- Property damage and liability: If runoff from burned land causes damage to neighboring properties, policyholders could face liability concerns.
- Rebuilding delays: Soil instability caused by mudslides or flooding could delay rebuilding efforts and increase construction costs.
- Insurance coverage issues: Standard homeowners insurance policies typically exclude damage from mudslides and flooding, though fire damage may still be covered. It is critical to understand the nuances of your policy and explore whether supplemental coverage, such as flood insurance, applies.
Lessons learned from the Santa Barbara mudslides
The 2018 Montecito mudslides in Santa Barbara County offer valuable insights into managing the post-wildfire landscape. These mudslides, triggered by heavy rainfall just weeks after the Thomas Fire, resulted in more than 20 fatalities, the destruction of over 100 homes and more than $200 million in property damage.
A fundamental takeaway from this disaster lies in understanding insurance coverage implications in California, which follows the “efficient proximate cause” doctrine. While standard homeowner policies typically exclude coverage for mudslides and landslides, fire coverage may still apply if the fire is deemed the efficient proximate cause of the resulting damage. Efficient proximate cause is the legal doctrine that identifies the primary or dominant cause in a sequence of events leading to a loss, determining which cause triggers coverage under an insurance policy. See Garvey v. State Farm Fire & Cas. Co., 48 Cal. 3d 395, 402-03 (1989). In such cases, the causal chain links the wildfire to subsequent mud or debris flows, allowing policyholders to recover losses that would otherwise fall under earth movement exclusions. For example, the California Insurance Code states that “if a loss or damage results from a combination of perils, one of which is a landslide, mudslide, mudflow, or debris flow, coverage shall be provided if the insured peril is the efficient proximate cause of the loss or damage, and coverage would otherwise be provided for the insured peril.” Cal. Ins. Code § 530.5. Furthermore, California courts have held that a landslide, mudslide or similar event is covered if a wildfire is the “efficient proximate cause” and “predominantly caused” the loss. See Howell v. State Farm & Casualty Co., 218 Cal. App. 3d 1446, 1459-61 (1990); Stankova v. Metro. Prop. & Cas. Ins. Co., 788 F.3d 1012 (9th Cir. 2015).
Key lessons from this disaster include:
- Claims challenges: Many homeowners faced difficulties navigating insurance claims, particularly when determining whether damage was caused by the fire (covered) or the mudslide (often excluded in standard homeowners’ policies unless it can be demonstrated that the fire was the efficient proximate cause of the mudslide damage). Policyholders should document conditions thoroughly to support their claims.
- Debris removal costs: The removal of debris, a critical step in rebuilding, was a significant expense. Some policies include limited coverage for debris removal; understanding your coverage limits is essential.
- Need for legal assistance: The efficient proximate cause doctrine can be complex, as it requires determining the primary cause of a loss – particularly in cases involving mudslides, landslides and similar events, where multiple factors are involved. Given these complexities, consulting with an experienced lawyer is essential. A legal expert can analyze the specifics of your insurance policy, assess the circumstances of your claim and advocate for the coverage you may be entitled to, ensuring you do not miss out on rightful benefits.
What policyholders should do now to prepare for rain
Policyholders affected by the Los Angeles wildfires should take proactive steps to mitigate further losses as rain approaches. Here is what you can do:
1. Review your insurance policy
- Understand coverage: Confirm whether your policy includes debris removal, soil stabilization and temporary repairs. Additionally, it is helpful to understand the difference between mudslides and mudflows, particularly in California, where the legal doctrine of efficient proximate cause can be a lifeline for policyholders. Mudslides occur when a solid mass of earth or rock moves downhill, often after the soil absorbs and holds a substantial amount of water. These events are classified as “earth movement” and are excluded from standard homeowners, business and flood insurance policies unless they can be proven to stem from a covered peril, such as a wildfire. Mudflows, by contrast, involve heavy rainfall creating a river-like movement of water mixed with soil and sediment.
- Consider flood insurance: Flood insurance, offered through FEMA’s National Flood Insurance Program (NFIP) or select private insurers, does cover mudflows. However, like floods, mudflows are typically excluded from standard property policies. The practical impact for homeowners and businesses is significant: Without proper flood insurance, you may be left to bear the financial burden of a mudflow, while coverage for mudslides generally requires demonstrating a connection to a covered peril to avoid exclusions. If your property is in a high-risk area or near recent burn zones, it is crucial to review your policies carefully and consider additional coverage. If considering flood insurance, review the insuring language closely, as standard flood insurance typically only covers mudflows and may not provide coverage for mudslides or landslides. Flood insurance through NFIP is typically limited to $250,000 for structures and $100,000 for personal property. Additionally, subject to certain exceptions, there is typically a 30-60 day waiting period from the date of purchase before your policy will go into effect.
2. Document current conditions
- Take photos and videos of your property to document the damage caused by the wildfire. This evidence can be invaluable for claims if rain worsens existing conditions.
3. Protect your property
- Install sandbags and barriers: Create barriers to redirect water and prevent soil erosion.
- Tarp exposed areas: Cover exposed soil with tarps to minimize water penetration and erosion.
- Seek professional help: Engage soil engineers to assess the stability of your land and recommend preventative measures.
4. Stay informed and connected
- Evacuation planning: Early evacuation orders saved lives. Policyholders should monitor local emergency alerts and have a plan in place.
- Monitor weather alerts: Use resources like the National Weather Service and local emergency agencies for real-time updates.
- Engage with neighbors: Coordinating efforts with neighbors can improve overall community preparedness.
- Consult your insurer: Inform your insurer about your preparations and seek guidance on any additional coverage options.
5. Plan for evacuation
- If you are located in an area with a high risk of rainfall and the wildfires have made neighboring properties susceptible to mudslides, prepare an emergency kit with essentials like food, water and medications.
- Keep essential documents, including insurance policies and property records, in a safe, easily accessible place.
Looking ahead: Mitigation and resilience
The challenges faced by Los Angeles wildfire survivors underscore the importance of proactive risk management. By learning from past disasters like the Santa Barbara mudslides, policyholders can better navigate their recovery journey and avoid common pitfalls.
Reed Smith’s Insurance Recovery Group has extensive experience assisting policyholders in wildfire-affected regions. For more information, please see our Wildfires and Other Natural Disasters page.
If you have questions or need support with your insurance claim, do not hesitate to reach out to Reed Smith’s Insurance Recovery Group. Together, we can help you rebuild, recover and protect against future losses.
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