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Back in November my home burned down in the Camp Fire in Norther California. A few days before the house burned down I updated my policy to have a lower deductible and more coverage. Now that it is time to pay out for the loss, my insurance company is saying that since "the event had already begun" when I made the changes they will not honor the terms of the newer policy.

I have a declaration page that clearly states that my coverage is in effect a day or two before my home burned down. I had already paid for the improved coverage and was told during my phone call that the changes would take effect immediately.

Can they legally do this?

Also - they are now requesting that I have a "recorded phone call" with them to discuss which policy will be in effect. I would like to be as prepared as possible for this phone call and would obviously like an outcome in my favor. Are there things that I should avoid saying or things that I should do to prepare for this phone call?

Thanks for any help

  • Are there any words about events already happening in the policy since they brought it up? – Putvi Apr 5 at 17:27
  • Do not assume that they will give you a copy of the recording, which you will want when you sue them (if you make some small legal error in speaking to them). Your attorney should be the one talking to them. – user6726 Apr 5 at 23:01
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Probably time to talk to a lawyer. Take a look at Camp Fire Butte Resources | Legal Services of Northern California. You should have a lawyer to determine if there are clauses in your policy that nullify the declaration page in certain instances, how the insurance company determined if and when the fire event started, etc.

Lawyers at LSNC will likely have experience with your insurance company, and may have shortcuts in terms of direct contacts with the company. LSNC can advise you on even if you should do the phone call; the insurance company may try to get you to admit discrepancies or otherwise damage your own case. And if LSNC advises you that it is OK to do the call, they can tell you how to prepare. LSNC can also advise you if and when to consider pursuing court action if the insurance company does not want to settle the claim.

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What they are talking about is a theory that was published in insurance industry materials that states insurance is only meant to cover events that come about by accident and not those that happen purposely.

They want to make sure that you didn't know that your house was burning and then decided to get insurance because you knew for sure that the house would burn and did not disclose it to them.

That does not mean the court has to abide by that, but if they can prove that you knew the house was burning or would burn and did not disclose it, the court does not have to honor your request either.

You need to get some kind of evidence showing that you did not know the house was burning or that it would burn. That could be photos, or testimony of neighbors, or anything else showing that you didn't purchase the insurance as your home was burning.

Sorry about your home, and I hope everything works out. Best wishes!

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insurance company is trying not to honor recently updated policy

Can they legally do this?

Based on the information you have provided, it appears that the insurer is entitled to rescind the policy update (I am assuming that the fire began prior to your request to update the policy, although this is not entirely clear from your inquiry).

That being said, knowing (1) the terms of your updated policy/contract, and (2) the details of your interactions with the insurer at the time of updating the policy, are vital toward identifying with more precision the merits of each party's position.

Your description reflects that the insurer is exercising its right to rescind the policy update. See DuBeck v. California Physicians' Service, 234 Cal.App.4th 1254, 1264-1265 (2015):

An insurer has the right to rescind a policy when the insured has misrepresented or concealed material information in seeking to obtain insurance. [...] When an insurance company, with full knowledge of all the facts, enters into negotiations and relations with the assured, recognizing the continued validity of the policy, the right to a forfeiture for any previous default which may be asserted is waived.

(internal citations omitted).

Thus, your insurer would prevail if it proves your awareness and concealment of the fire at the time you sought to update the policy. This makes sense because, were it not for the concealment, the insurer would have adequate information for deciding whether to require a higher premium or decline your request altogether.

By contrast, you would prevail if you are able to prove that the insurer was (or should have been) aware of the heightened risk to which your property was exposed at the time the insurer confirmed that "the [policy] changes would take effect immediately". This is what the court alleges to have happened in the DuBeck case.

Your policy/contract might contain language that can be construed as equivalent to the insurer's pre-emptive waiver of its right to rescind the policy update(s), and/or language that formulates the notion of exposure in a way that favors your position. Hence the importance of knowing the terms of your policy/contract. Without knowing the details, it is impossible to guide you in that regard.

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    You can't prove that the poster concealed or misrepresented anything. – Putvi Apr 5 at 20:49
  • I was never asked about anything related to fires or natural disasters. It seems like it would be a stretch to suggest that I "misrepresented or concealed" anything doesn't it? – Brh Apr 5 at 20:50
  • Yes it is a stretch. – Putvi Apr 5 at 20:52
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    I decided to downvote (#2) because your answer asserted that there was concealment, and there is no reason whatsoever to assume there was any concealment. – user6726 Apr 5 at 23:04
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    @user6726 Thanks for the candor, but you misread my answer. I did not assert or imply any concealment by the OP. The paragraph with "insurer would prevail if it proves your awareness and concealment" does not factually attribute to the OP any concealment. It only outlines the conditions whereby the insurer would prevail. The insurer will predictably pursue that position, whence it is in the OP's best interest to know how to refute it. Similarly, the very next paragraph switches the roles, and thereby I am not asserting or implying that the insurer was aware of the ongoing fire either. – Iñaki Viggers Apr 6 at 10:14

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