Jonathan B. Sokol

Our thoughts and prayers are with those who have suffered losses due to the recent Los Angeles wildfires. Below we offer some guidance to those affected by these devastating fires to pursue and preserve their rights to insurance recovery for their losses. Locate or obtain a complete copy of your residential homeowner’s insurance policy or commercial property policy (in the case of an affected business) that may provide coverage. The law requires your insurer to provide you with the policy free of charge within 30 days of your request. Ask your agent or broker to confirm how much coverage you have (1) to rebuild or repair your home, (2) for your contents or personal property, and (3) for additional living expenses (ALE), such as alternative housing.   Contact your applicable insurer and immediately report your loss to start the claims process. If you suffered a significant fire loss, you should report a claim to your insurer immediately rather than worry about increased premiums or a policy cancelation. On January 7, 2025, Governor Newsom proclaimed a state of emergency covering Los Angeles and Ventura counties due to the Palisades, Eaton, and other fires. Due to the Governor’s January 7 declarations, no admitted or nonadmitted insurer can issue a notice of cancellation or non-renewal due to wildfire risk for one year, starting on January 7, 2025, for any policy of residential property insurance in the ZIP Codes affected by the fires. The California Department of Insurance (DOI) has a useful search engine to determine the zip codes covered by the moratorium.   If you have a California Fair Plan (CFP) policy, you can report the claim on the CFP website. For other policies, you should review your policy and the declarations pages for the policy for information on how to report your claim or have your agent or broker report the claim for you. The DOI also has a list of contact numbers for residential insurers here. Make sure that you receive a written acknowledgment from your insurer of the claim reporting, a claim number to be used on communications, and the contact information for the adjuster assigned to your claim.   Do your best to protect your property. Your insurer must reimburse you for all reasonable costs to protect your property as long as you keep receipts for the expenses and materials purchased to cover or protect your property. Payments for temporary repairs should also be covered by your policy. Do not make any extensive permanent repairs until after an adjuster is assigned to your claim and has had the opportunity to assess the damage. You need to obtain approval from the insurer to proceed with cleanup and debris removal and any extensive or permanent repairs. Your policy likely contains a “no voluntary payments” clause which generally prohibits the insured, except in emergency circumstances, from making payments without the insurer’s approval.   Once an adjuster is assigned to your claim, you should request that they start paying for any ALE that are incurred and review any requirements with the adjuster for submitting and obtaining reimbursement for such expenses. Your time to collect ALE after a declared catastrophe is not less than 24 months even if your policy provides otherwise; however, your total expenses are subject to the policy limit applicable to ALE.   Document and maintain all your communications with your insurer/adjuster about your claim.   Take pictures and videos documenting your losses. Before and after pictures and videos are important to support your claim. Prepare an inventory of damaged or lost property, including contents lost or destroyed in the fire to support your claim. The DOI has an excellent home inventory guide that can be used as a template to create an inventory of your contents and values to submit in support of your claim.   The first payment you receive from an insurer is often an advance payment and not a final payment. You can also request an advance payment to cover the start of repairs. You may also receive on-going payments for ALE. You should be sure to understand what the payment does and does not cover and be wary of initial settlement offers that are represented as full settlements and require a release of liability.   Evaluate whether you will need a public adjuster or an attorney to assist with handling your claim. You do not need to make a decision before you report the claim to your insurer to initiate the claims process. You can also try to settle your claim directly with your insurer before hiring a public adjuster or an attorney. Public adjusters typically charge a percentage of the claim settlement for their services. Make sure you understand fully what they are charging and the services you will obtain before signing a public adjuster contract. A public adjuster should not charge a fee on payments you received from your insurer before the contract with the adjuster is signed. Depending on the percentage of the recovery charged by a public adjuster and the amount of your insurance claim, it may make more sense in terms of the likely net recovery to hire a qualified coverage attorney on an hourly fee basis than a public adjuster on a percentage basis. Fire loss claims can involve complex issues. Understanding your policy benefits and the proper presentation of your claim is important to maximizing insurance recoveries for wildfire claimants. Our Firm Greenberg Glusker represents policyholders in insurance recovery claims and litigation against insurers. For additional assistance or information, please contact: Jonathan B. Sokol, Partner and Chair, Insurance Recovery Practice | 310.201.7423 | jsokol@greenbergglusker.com

In Axis Reinsurance Co. v. Northrop Grumman Corporation, 2020 DJDAR 10114 (9th Cir. Sept. 14, 2020), a case of first impression under California law, the Ninth Circuit held that an excess insurer may not dispute exhaustion of underlying insurance or otherwise challenge on coverage grounds an underlying insurer’s decision to settle absent a showing of fraud or bad faith on the part of the insured or the underlying insurer.  The decision is significant because excess insurers sometimes dispute exhaustion in order to avoid providing coverage or in an attempt to negotiate the provision of less than full excess coverage. An excess insurer may do so on the theory that the underlying insurer overpaid on the underlying claim or paid for an uncovered claim. This decision squarely rejects such a theory and holds that when an entity purchases multiple layers of insurance, the excess insurers bear the risk that the primary and underlying insurers might adjust claims in a manner that would trigger secondary excess coverage. To discuss this case or other insurance coverage litigation questions, reach out to Partner Jonathan Sokol.