This legislation and the commissioners ruling will make many homes in the state uninsurable except for the FAIR plan. I realize that this is short term populism to win an election, but the long term consequences for many in the state could be the inability to purchase a comprehensive policy with a lower deductible in the primary market. Any home within half a mile from a large hill or mountain will bring this unintended peril to an insurer.
Although the consequences of this event are tragic, many of these people owning these homes are extremely wealthy and do not need to be subsidized for an exposure not paid.
All solid reasoning, Observor. My sympathies indeed go to the mudslide victims, but the insuring public cannot let pure sympathy derail economic sense as Commissioner Jones (D) is in his ruling.
P&C insurers collected exactly $0 HO premium for this colossal loss, yet Jones (D) has pre-decided the insurers WILL cover the loss same as the fire risk which was properly accounted-for in the premium structure. It brings to mind this: If the campaigning Mr. Jones (D) expects HO insurers to cover losses outside of long-established policy boundaries, he must also expect insurers to charge without boundaries. Taking that a step further down the slippery slope, a policy that covers everything you want will cost you every dollar you make.
If Mr. Jones (D) gets his way, he will reward his wealthy coastal area political contributors affected by the mudslides. Meanwhile, the rest of the working stiffs who own & insure California homes in safer areas will end up subsidizing HO insurance for the wealthy on their hazardously located re-built homes.
Then as he does now, Mr. Jones (D) will not allow insurers to increase price commensurate with the broadened risk his ruling will force on them. Jones (D) evidently never passed Economics 101, and the idea that he’s “standing up for the little guy against Big Insurance” is an arrogant lie and complete hypocrisy.
It looks like they are proposingg a law that is codifying what was decided by an old litigated case. The rub is how proximate cause will be interpreted by adjusters and then CDI.
Given that he is running for AG this year am thinking that CDI’s interpretation will rarely be the same as how the carriers look at it.
On the surface this looks like tortured logic. Proximate Cause applies to liability and requires an unbroken chain of events leading to the loss. Even if you applied this to property losses the ensuing rains are new events that lead to the mud slide losses. Seems like a crazy stretch in law or logic to me.
Efficient Proximate cause as reasoned in Garvey v. State Farm in 1989 employs the reason “but for” this debris in case of the Woolsey fire the fire wouldn’t have occurred. We have had numerous “el ninc” winters worse then this that did not cause a flood to the location in Malibu I live since it was built in 1961 or so.
Will insurers then subrogate against the utilities accused of being responsible for some of the fires? Limit their payouts to policyholders who win their suits against the utilities?
Would appear to be political grandstanding at its finest. Shocking that the commissioner would do such a thing whilst running for a new office. Will be interesting to see what the courts decide as my review of the case mentioned on the DOI website had fire damage to the property of the insured and not to others property. I do not agree with that court on the matter but at least can see how they came to the conclusion they did in that case.
Makes one wonder what expansive coverage the DOI will come up with next.
fire may have been the proximate cause, however most of the homes affected by the mudslide did not have any “fire” damage to their home……….and it wasn’t just days after the fire, it was weeks later the mudslides occurred. just a campaign for votes.
I am not expert on the CA policy form, but the proximate cause of the loss isn’t fire. It’s the rain. It appears to me that covering the mudslides would develop an unaffordable rate unless the state declares all property policies must cover mudslides and promulgates rates covering all property, spreading the risk of loss and adding to the rating base.. Companies could still rate it based upon claims experience but not redline or gouge the public. Very much like they addressed the Terrorism hazard.
This legislation and the commissioners ruling will make many homes in the state uninsurable except for the FAIR plan. I realize that this is short term populism to win an election, but the long term consequences for many in the state could be the inability to purchase a comprehensive policy with a lower deductible in the primary market. Any home within half a mile from a large hill or mountain will bring this unintended peril to an insurer.
Although the consequences of this event are tragic, many of these people owning these homes are extremely wealthy and do not need to be subsidized for an exposure not paid.
All solid reasoning, Observor. My sympathies indeed go to the mudslide victims, but the insuring public cannot let pure sympathy derail economic sense as Commissioner Jones (D) is in his ruling.
P&C insurers collected exactly $0 HO premium for this colossal loss, yet Jones (D) has pre-decided the insurers WILL cover the loss same as the fire risk which was properly accounted-for in the premium structure. It brings to mind this: If the campaigning Mr. Jones (D) expects HO insurers to cover losses outside of long-established policy boundaries, he must also expect insurers to charge without boundaries. Taking that a step further down the slippery slope, a policy that covers everything you want will cost you every dollar you make.
If Mr. Jones (D) gets his way, he will reward his wealthy coastal area political contributors affected by the mudslides. Meanwhile, the rest of the working stiffs who own & insure California homes in safer areas will end up subsidizing HO insurance for the wealthy on their hazardously located re-built homes.
Then as he does now, Mr. Jones (D) will not allow insurers to increase price commensurate with the broadened risk his ruling will force on them. Jones (D) evidently never passed Economics 101, and the idea that he’s “standing up for the little guy against Big Insurance” is an arrogant lie and complete hypocrisy.
It looks like they are proposingg a law that is codifying what was decided by an old litigated case. The rub is how proximate cause will be interpreted by adjusters and then CDI.
Given that he is running for AG this year am thinking that CDI’s interpretation will rarely be the same as how the carriers look at it.
Let’s hope the carriers fight this in court.
On the surface this looks like tortured logic. Proximate Cause applies to liability and requires an unbroken chain of events leading to the loss. Even if you applied this to property losses the ensuing rains are new events that lead to the mud slide losses. Seems like a crazy stretch in law or logic to me.
Efficient Proximate cause as reasoned in Garvey v. State Farm in 1989 employs the reason “but for” this debris in case of the Woolsey fire the fire wouldn’t have occurred. We have had numerous “el ninc” winters worse then this that did not cause a flood to the location in Malibu I live since it was built in 1961 or so.
Excellent point that rain is the proximate cause. If there is no rain, there is no mud.
So then what would have been the trigger?
Will insurers then subrogate against the utilities accused of being responsible for some of the fires? Limit their payouts to policyholders who win their suits against the utilities?
A far reaching liberal stance for sure to gain popularity and votes.
Would appear to be political grandstanding at its finest. Shocking that the commissioner would do such a thing whilst running for a new office. Will be interesting to see what the courts decide as my review of the case mentioned on the DOI website had fire damage to the property of the insured and not to others property. I do not agree with that court on the matter but at least can see how they came to the conclusion they did in that case.
Makes one wonder what expansive coverage the DOI will come up with next.
Is it possible to endorse “mudslide” onto a homeowners policy in CA?
I don’t see why not? If you can have , “Sink Hole” , why wouldn’t it be defined under movement?
fire may have been the proximate cause, however most of the homes affected by the mudslide did not have any “fire” damage to their home……….and it wasn’t just days after the fire, it was weeks later the mudslides occurred. just a campaign for votes.
I am not expert on the CA policy form, but the proximate cause of the loss isn’t fire. It’s the rain. It appears to me that covering the mudslides would develop an unaffordable rate unless the state declares all property policies must cover mudslides and promulgates rates covering all property, spreading the risk of loss and adding to the rating base.. Companies could still rate it based upon claims experience but not redline or gouge the public. Very much like they addressed the Terrorism hazard.