Author: Judy

The Loss of a House in San Francisco

The Loss of a House in San Francisco

California spends billions rebuilding burned towns. The case for calling it quits

Last month, with the anniversary of the San Bruno fire approaching, news of a lawsuit against an insurance company for failing to pay for the reconstruction of a San Francisco street burned so badly that it destroyed the building next door, has made the rounds.

The news story, which is here, has the feel of a bad joke, because it is, really, one made up out of whole cloth. But the lawsuit, which was filed by the owners of an apartment building where the fire occurred, alleges that they did not receive “prompt and adequate” insurance payments.

That is not quite accurate, because they were paid, within a few months, but were nonetheless unhappy that the insurance company had taken so long to make the payments. (I am guessing that they were not paid for the year of the fire, when the building was still being built — it is not in the lawsuit, so presumably they did not sue for the year of the fire.)

But that does make the story sound like something out of a bad comedy. The city is spending $1 billion rebuilding the area where the fire started (it was only an eight-alarm fire). The owner of the apartment building was receiving insurance payments, but the city did not make them until months after the fire, and then they were delayed so long that no one was living in the building. The apartment building has been sold, and no one got a new apartment in that building. No new insurance. No money for the tenant.

The plaintiffs (the tenant’s family) are claiming that although they received some insurance money, the delay in making the payments resulted in a “loss that is not compensable under California’s Insurance Code.” They are not suing for the fire itself, or for the cost of rebuilding, or for damage to other parts of the building. They are seeking about $1.6 million for their house.

The claim is unusual for several reasons. First, it is not an insurance law question. Insurance law is designed to protect against a possible payout, and to ensure that policyholders receive

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