Flood insurance questions arise after WeHo water main break

Talk about insurance claims, because this is a big problem. Hundreds of West Hollywood locals are dealing with property damage because of the water main break and the flooding that caused. So what can they do about it? Joining me to talk about this is Shant Karnikian. He's an insurance and property damage lawyer. Shant, thank you so much for hopping on the stream with me. Oh, I think we're on mute. I think we're on mute. It's OK. We can unmute. I think we're good. OK, we're good. Nice office, by the way. Thank you. Yeah. Lay in the background, but not facing west. We're facing east from downtown. OK, very good. First question here, who is ultimately legally responsible for covering property damage when a century old pipe burst? Is it the utility? Is it the city? Is it private insurance? Well, a lot of it depends on whose pipe it is and what caused it. And what we're hearing here is that it's a DWP pipe. Despite the age, they still have an obligation to maintain it. When I say despite the age, the last person we were talking to, right, said the pipe is under 100 years old or just over 100 years old. It should last longer. Yes, it might be a maintenance problem. In fact, this was set to be replaced soon. So if it is their pipe, it would be the city's responsibility or DWP. They kind of go hand in hand because the California Constitution, the law in California is if if some utility, if something that's done for the public benefit harms a private citizen, then the governmental entity that operates that is on the hook for it. And you don't even have to necessarily prove what went wrong and that they made a mistake or something like that. If it's theirs and they're a public entity, it's done for the public and it harms people. They're on the hook for it. So and that's a concept called inverse condemnation. OK. Go ahead. I didn't mean to cut you off. No, I was going to say, but then you also said, what about insurance? Both of those things can be true. Insurance can also be on the hook for it, even though obviously they're not responsible, but they can be on the hook for it. But it's very tricky in this circumstance because it involves a form of flooding and a lot of property insurance policies exclude flooding, even if it's not flooding necessarily in the rain sense, but flooding if it's in the sense of groundwater intruding into a home, sewage backups, water main breaks, things like that. So sadly, my concern would be that a lot of the folks impacted by this were trying to make insurance claims are going to be denied because of those types of exclusions. But my advice to those folks would be if you do get denied, you should have someone review the denial letter and review your policy to see if it's actually true. Someone someone like yourself. Sure. Yeah. I mean, we yeah, that's something we often do. And it's a very technical analysis. Insurance policies aren't, you know, a dollar amount and a and a and coverage. It's it's a contract, oftentimes very long, convoluted contract. So it really depends. Have you heard from any of those impacted from the water main break? We have heard from people impacted by it. And anytime these types of disasters happen, we get calls about this stuff. And a lot of the situations have been insurance companies saying that they'll investigate. So nothing's for the folks we've spoken to, at least no decision has been made. But my concern would be that that they are going to take that position, that there is no coverage for this because it's excluded under your policy. So well, in terms of policy specifics, does a standard commercial or homeowners policy, a standard one, does that cover flooding? Well, there's no such thing as a standard policy. There are some things that are standardized, but each policy is very unique. There's coverage forms that get tacked onto policies or they get periodically removed. So that's why it's important outside of even this. But let this be a reminder to check your policy, to check with your insurance professional, like your broker or agent, to make sure whatever concern you have is covered under the policy because it is a very technical analysis. But generally, I don't want to say it's covered or not covered under a standard policy, but generally most homeowners policies are going to have some sort of exclusion for this type of this type of incident. Commercial policies is a different story. Maybe the property damage might not be covered, but there might be business interruption coverage, which means the losses that they face because of people's inability to access their business or street closures or some type of thing done by a governmental authority where they shut down the street or they order that a business be closed. So there might be coverage under that. I think that might be the best shot for coverage. But in general, you know, this is going to be a tough situation. A lot of people are going to find themselves without insurance recourse available. Yeah. Oh, OK. Well, that just made me think of Dialog Cafe, which is right there. It's a popular cafe that is impacted. They do have insurance. They let that be known nonetheless on their social media. They put out a GoFundMe campaign saying we know how insurance works and how slow, slowly this claim process could be. So in the meantime, we're trying to sort of handle this on our own through their GoFundMe, which, you know, you can understand. Specifically, though, if we want to take a lesson from this, what should be on a policy that would be covered in a situation like this so that we can all go home and check our policies? What should we what should we be looking for? Yeah, that's a great question. Well, number one, before it's a little bit beyond your question, make sure you have enough coverage to rebuild your property after a catastrophic loss like this. The fires are a great reminder of that, sadly. And this type of flooding is another reminder of that. Most people are drastically underinsured before we even get into whether or not there's coverage for it. They're they're drastically underinsured. So make sure there's enough to actually rebuild. Talk to a contractor. Find out what would it realistically cost for you to come in and rebuild my property from the ground up next. The other thing to make sure of in situations like this, if flooding is a concern of yours, make sure there's no exclusion for groundwater intrusion or sewage backups or things like that. And the best way to do that is to directly communicate that to your insurance company or to an insurance professional like a broker or an agent and tell them, I want to make sure if the water main breaks down the street, I have insurance coverage for that. And there's no exclusion for some type of backup. And in a city like Los Angeles, where there unfortunately is aging infrastructure, that's not an unrealistic thing to plan for or be worried about. As we as we just saw happen over here and we've represented plenty of other people in other parts of Southern California unrelated to this that have had water backups. They've had sewer mains break. They've had water main lines break and flood their homes. And in some situations, in most situations, there's no insurance coverage, so they have to pursue the DWP or whichever utility was responsible for maintaining it. Let me ask you, because we're seeing all the vehicles that were impacted. And that, in fact, is pretty much what we've heard, especially from the mayor of West Hollywood. He says that between 150 and 200 cars were damaged or just flat out and destroyed because of the water main break. So does this line up with car insurance then? Or is this still under your homeowners? Car insurance would actually likely cover this. There would there would be coverage for this. So that's sort of the easiest one of these items of losses for people to recover from is to make a claim to car insurance for that. And in fact, oftentimes car insurance is what covers a car, right? Even if even if you lost your car, for example, we represent many folks in the Palisades Fire or Eaton Fire. The claim for losing their car is oftentimes pursued or most of the time is pursued under their auto insurance policy and not their homeowners insurance policy, homeowners won't necessarily cover that. So that's sort of the good news here in terms of what things are covered versus not covered. We like we like good news. Yeah. What what critical physical or digital evidence should property owners be collecting right now? The extent of the loss, you know, photographs of what happened when it happened, photographs of the room, because soon people will have to engage in doing cleanup efforts and things like that. And oftentimes both insurance companies or to the extent they sue the city and pursue claims against them, oftentimes both of both of those parties will argue you didn't mitigate, meaning you didn't do enough to sort of prevent the damage from getting even worse or you didn't document it and you can't prove how bad the damage was or whatever that item is that you're looking for. We don't believe that you actually lost it or it was damaged because you don't have proof of it. So document, document, document. You can't there's no such thing as too much documentation. You know, take a video of everything. Keep if you've been displaced, keep receipts of the costs associated with that, with even the food you have to buy or the lodging or housing that you have to rent, whatever it is, whatever increased cost you have. Keep receipts of that document, everything that you incur as a result of this document, all the damage you have because you may have a potential claim against the city. You may have an insurance claim, but either way, those things are going to be critical to prove up what you actually lost. And before I let you go, in terms of a deadline, whether it's a claim against the city or you have to put in the file, a claim with your insurer. What is that deadline? That's a that's a great question to end on. Probably the most important thing people take away from this. If you're looking to pursue a claim against the city or DWP or whatever governmental entity that may be ultimately found liable here, six months from the date of the incident is a very, very, very strict deadline that you can't get around if you blow that deadline. You need to make what's called a government tort claim with the city. You need to give them notice of the fact that you've been damaged to a certain degree. It's best to do that through a lawyer, but people can do that themselves. It's not a lawsuit yet. Within six months, you have to make that government claim on the insurance side. A lot of policies, insurance companies can't limit the time for you to make the claim to less than one year. So that's a good rule of thumb. A lot of policies have a two year limitation period for making a claim. But be on the safe side. Make it sooner rather than later. Certainly don't wait a full year or 10 months or 11 months or anything like that. Make it as soon as possible. These deadlines oftentimes are very critical. You miss it. It's just a bright line rule. You don't get to pursue your claim. So six months against the government and a year against the insurance for making a claim with the insurance company. Those are the important ones to remember. Well, you are great. And I'm so glad that you reached out to me. You reached out to me on social media and here you are. And I'm happy to have you. And thanks so much for helping us get through this. Yeah. Thanks for covering it, because I think it's an important thing. And we sadly, in our work, come across people that get hurt in these situations when they're not aware of things like their options or the deadlines. So it's really important. Critical information. Thank you so much. Thank you. Take care. All right. We will have an update on day two of the preliminary hearing for singer David when we come back. Also, good news about the famous, the historic Cinerama Dome. More to come in two minutes.