ARE YOU THE SURVIVOR OF A WILDFIRE IN CALIFORNIA?
Wildfires in 2018 and 2019 have burned hundreds of thousands of acres, destroyed thousands of structures and caused 88 deaths. So many have lost loved ones, homes, employment and businesses, not to mention personal items with sentimental value, memories, a sense of community and peace of mind. If the wildfire was started by equipment owned by a public utility, you may be able to recover some or all of your losses not fully covered by insurance.
YOUR INSURANCE WON’T FULLY COVER YOUR WILDFIRE LOSSES
Property owners whose property has been damaged or destroyed by a wildfire are often initially reluctant to make a claim against a public utility whose equipment may have been the cause of that wildfire. Their reasoning often is that their insurance will cover their losses. However, even if they have insurance, their losses are unlikely to be fully covered by that insurance. Here are some of the reasons why this is true.
First, they may be underinsured. Insurance policies usually have a “cap”, or policy limits. Even with endorsements, which increase those limits under specified conditions, a property owner’s loss may exceed those limits. The resulting underinsurance will mean that in the case of a total loss, the policy may not cover the full amount of the replacement cost.
Second, if destroyed improvements are not replaced within the period specified in the policy, the insured may be entitled under the policy only to the depreciated value of the destroyed improvements but not the full cost of replacing those improvements. And most policies don’t give the policy holder the full cost of replacement unless the destroyed property is first replaced by the policy holder. In other words, the policy holder may be reimbursed for the cost of replacement but may not be entitled to that cost in advance to enable the policy holder to rebuild or replace the destroyed improvements.
Third, in fire prone areas, the property owner may not be able to find an insurer willing to write a policy insuring the property. In that event, the property owner may have to rely on the California Fair Plan, which provides policies to homeowners, condominium owners, and renters. However, that insurance does not cover commercial property and may not fully cover the replacement cost of a large, expensive home.
Fourth, there usually are strict limits on insurance coverage for damage to the land itself. Typically, those limits for a homeowner are only 5% of the limits for the dwelling. If there is extensive landscaping, the cost to replace that landscaping may far exceed that 5% limit. In addition, even within that 5% limit there is usually a further limit on coverage for removal of individual damaged trees, typically no more than $500 per tree, and sometimes less.
Fifth, insurance policies rarely compensate property owners for the emotional distress they suffer as a result of their losses.
RECOVERY WHEN PUBLIC UTILITY EQUIPMENT STARTS A WILDFIRE
If a property owner makes a claim against a public utility responsible for a wildfire, the property owner may be entitled to recover from that public utility for a wide range of losses not covered or not fully covered by the owner’s insurance, including:
The full cost to rebuild or replace destroyed improvements.
The full reduction in land value as a result of the fire.
The full loss of future business income.
Compensation for emotional distress.
Compensation for the loss of all personal property, including personal property that has significant sentimental value.
Double or possibly triple damages for injury to trees.
Interest on the amounts owing for damage to property from the date of the fire.
An attorney fee award.
Other relief.
So regardless of whether a property owner was insured for fire damage, an owner may be well advised to also make a claim directly against any public utility whose equipment started the fire in question.
ABOUT OUR CONTINGENT FEE
Our contingent fee is typically 25% of your recovery, so if there is no recovery, there is no attorney fee.
Also, we usually agree to advance some or all of the costs of investigating and prosecuting your claim. While you would be required to reimburse us for any costs we advance on your behalf if we prevail, if we don’t obtain a recovery sufficient to cover those costs, we won’t seek to be reimbursed by you for those costs. So, for example, if there is no recovery, you won’t be required to reimburse us for any of the costs we incur in representing you.
Equally important, if we prevail, you would be entitled to an award of reasonable attorney fees. So, we would include your attorney fees to us as a component of your claim. And while the attorney fee you would owe us may exceed the attorney fee component of a settlement with the defendant, it is nice to know that a potentially substantial part of the attorney fee you pay is likely to be passed on by you to the defendant as part of any settlement.
Also, most if not all of the costs we incur on your behalf in prosecuting your claim are likely to be owed to you by the defendant. So we would also include those costs as a component of your claim.
Sometimes a person tells us that if you make a claim, the attorney takes most of any recovery as fees, so why bother? This can be true where the attorney fee is computed on an hourly basis and the dollar recovery is small. But this is never true in a contingent fee case because the actual attorney fees can never exceed the percentage of the recovery stipulated as the fee in the attorney client contingent fee agreement. So if we have a 25% contingent fee, our fees can’t exceed 25% of your recovery.
And as a practical matter, the attorney fee you would end up paying out of your own pocket is likely to be significantly less than 25% of your damage recovery because your settlement is likely to in part reflect defendant’s attorney fee liability to you.