California Alerts Residents in Burn Areas About Flood And Mudslide Coverage

January 26, 2021

California Insurance Commissioner Ricardo Lara is alerting residents to review their current insurance policies in the midst of a forecast of winter weather bringing the possibility of floods, mudslides, debris flows, and other disasters to recent wildfire burn areas throughout the state.

Lara issued a formal notice to insurance companies reminding them of their duty to cover damage from any future mudslide or similar disaster that is caused by recent wildfires that weakened hillsides.

The United States Geological Survey has projected increased likelihood of debris flow for fire-scarred areas of the state in the event of heavy rainfall.

Homeowners and commercial insurance policies typically exclude flood, mudslide, debris flow, and other similar disasters, unless they are directly or indirectly caused by a recent wildfire or another peril covered by the applicable insurance policy.

The California Department of Insurance has posted a fact sheet to answer questions about what policies cover.

“Winter weather is bringing the threat of a second catastrophe to wildfire survivors like we saw in Montecito in 2018, and it’s critical to be prepared,” Lara said in a statement. “Before disaster strikes, I am alerting insurance companies to their obligation to cover any mudslide, debris flow, or other damage that is caused by our recent wildfires so that people can recover quickly.”

The Montecito mudslide in Santa Barbara County in January 2018 that followed the destructive Thomas Fire claimed 23 lives and caused more than $421 million in damage, according to CDI data. Following that disaster, the department issued a notice to insurance companies about their requirement to pay mudslide claims that are directly or indirectly caused by the wildfires.

This time, due to the scale of the 2020 wildfires across the state, the CDI preemptively issued today’s Notice to all property and casualty insurance companies to ensure consumers are protected.

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