January 24, 2025

California Fires Leave Homeowners Wondering About Landslide Coverage

Fires cause massive damage. However, they also increase the risk of more damage in the future.

When rain hits a fire-damaged hillside, it increases the risk of a landslide.

Homeowners buy insurance to protect against unexpected damages – including landslides. But does insurance cover landslide damage after a fire?

Typically, homeowners insurance policies exclude damage for “earth movement.” Because of that exclusion, most landslide damage is not covered by insurance.

However, California and other states have efficient proximate cause rules: if a fire caused a landslide, you could receive compensation.

Here’s how it works:

Most homeowners insurance policies cover fire damage. If your house burns down in a brush fire or forest fire, then insurance should cover the cost of rebuilding or repairing your home.
Most homeowners insurance policies do not, however, cover damage linked to earth movement. If an earthquake pushes earth onto your home in a landslide and destroys it, for example, you are generally not able to make a homeowners insurance claim (unless you have previously purchased earthquake insurance).
Where things get messy, however, is when multiple causes combine to create damage – say, if a burst pipe causes water to flow down a hill, leading to a landslide. In this situation, insurance companies use the “efficient proximate cause” rule to apply coverage.

How Efficient Proximate Cause Works

What happens when a covered event – like a burst pipe or fire – creates the conditions for a landslide?

As Haffner Law explains, landslides are often caused by multiple events, forcing insurers to apply coverage based on the “efficient proximate cause” of the loss. Here’s how it works:

Insurance policies cover some events but not others. A standard policy covers house fires but not landslides, for example.
If your home is damaged by multiple factors, for example, then insurers investigate the “efficient proximate cause” of the loss.
Under efficient proximate cause, insurers identify “the one [cause] that sets others in motion.” (Sabella v. Wisler (1963) 59 Cal.2d 21, 31-32.)
When a fire strips a hillside of vegetation, it creates optimal conditions for a landslide. Suddenly, the earth is easier to move – say, after a rainstorm or burst pipe. One could argue that the fire was the “efficient proximate cause” of the landslide because it set all other causes in motion.
Rain wouldn’t normally cause a landslide. However, because the area was recently hit by fire, rain did cause a landslide with the fire being the efficient proximate cause.
The efficient proximate cause rule was established in a 1989 case between State Farm and a policyholder (Garvey v. State Farm Fire & Casualty Co. (1989) 48 Cal.3d 395, 406-08.) In that case, homeowners purchased an “all risks” policy from State Farm, only to have State Farm later deny a future earth movement claim.

Efficient proximate cause could be the difference between having your claim denied or approved. If the cause “that sets others in motion” is covered, then your insurer could cover it. If it’s an excluded cause, then your insurer could deny your claim.

California Insurers May Be Required to Cover Post-Fire Landslides

Why is this important? Because it means insurers in California may be required to cover landslides when they’re caused by a fire.

As an example of the efficient proximate cause rule in action, California’s courts have established precedent extending coverage for landslides – as long as the landslides were caused by a previous fire.

In 1990, a California policyholder appealed State Farm to approve her claim because the efficient proximate cause of the landslide was a fire, which is a covered event. (Alex R. Thomas & Co. v. Mut. Serv. Cas. Ins. Co. (2002) 98 Cal. App. 4th 66, 76.)

Insurers Paid $421 Million in Claims During 2018 Montecito Mudslide Due to Efficient Proximate Cause

We have proof of the efficient proximate cause law in action in California.

During the 2018 Montecito mudslides, insurers were forced to pay $421 million in claims.

The California Department of Insurance specifically cited efficient proximate cause as the reason for these claims:

California Department of Insurance Commissioner Dave Jones issued] a formal notice to all property and casualty insurance companies reminding them of their duty to cover damages from the recent mudslides and debris flows if it is determined that the destruction of the hillsides and vegetation by the Thomas and other fires was the efficient proximate cause of the mudslides.

Jones argued there was “substantial evidence” proving the Thomas fire was the efficient proximate cause of the mudslide, forcing insurers to cover damages because of the efficient proximate cause rule.

What it Means for Homeowners

The most important lessons for homeowners to get from this is:

Lesson #1: Landslide damage could be covered if the landslide was caused by a previous fire. Because of the efficient proximate cause rule, insurers consider the cause “that sets others in motion” to determine whether or not coverage applies.
Lesson #2: If an insurer has denied your claim because of an earth movement exclusion, you may be able to fight back. Your insurer may have wrongfully denied your claim. If you can establish the landslide was caused by a fire disrupting vegetation in the area, you could receive a payout.

Earth movement exclusions may seem like a straightforward reason to deny a claim.

However, if the earth movement was initially caused by fire – like a fire that stripped a hill of its vegetation and created the conditions for a devastating landslide – then you could be entitled to compensation through your insurer.

As California continues to grapple with wildfires, it’s important for homeowners to educate themselves on earth movement exclusions and the efficient proximate cause rule.

Knowing the efficient proximate cause rule could be the difference between receiving full compensation for your property – or nothing at all.