It is typical for homeowner policies to exclude claims for losses caused by mudslides, debris flows, flooding and other similar events. But, generally, these policies do cover losses from wildfires.
Although the Thomas fire spared many homes, some were subsequently wiped out by mudslides. Fortunately for these homeowners, California Insurance Commissioner Dave Jones issued a formal notice to insurance carriers rendering mudflow exclusions in policies unenforceable where the “efficient proximate cause” of the mudslide was the fire.
Under California law, where a covered peril and an excluded peril occur in a sequence of events to cause a loss, a first-party insurance policy covers the loss if the covered peril was the “efficient proximate cause.” That is, the most important or predominant cause. Under an all-risk policy, the burden is on the insurer to prove the efficient proximate cause is the excluded peril. Under a named peril policy, the burden is on the policyholder to prove a covered peril was the efficient proximate cause.
The notice further states that there is a substantial basis for the Department to indicate that the Thomas fire was the efficient proximate cause of the flooding, mudflow, debris flow, mudslide, landslide, and other similar events in Santa Barbara County following the Thomas fire. If the Thomas fire or another peril covered by the policy is established as the efficient proximate cause of the damage resulting from the mudslides or other similar events following the fire, then such damage will be covered by the policy regardless of any exclusion in the applicable policy.
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