Wildfire, Then Mudslide – Insurance Coverage?

Overview: This Law Review addresses a question that frequently arises in California: is there insurance coverage if a wildfire burns a hillside above a house, which is followed by a mudslide destroying the house?  Hopefully you do not need to know.


Here’s a first.  We’re writing about Arizona law of which I know nothing.  That has never bothered me before, so let’s carry on.

Massive Wildfire

In the summer of 2011, a devastating wildfire, the “Wallow Fire,” swept through a large swath of northern Arizona, burning acres of vegetation.

The fire began on May 29th and was not contained until July 8th.  The fire consumed Magda Stankova’s and Victor Nikolaev’s (Stankova) detached garage but did not reach the house.  It destroyed all the vegetation on a nearby hillside.  You know what happened next.  On August 6, 2011, a month after the Wallow fire was put out, there was a mudslide on the hillside that destroyed the Stankova house.

Homeowner’s Policy

The Stankova’s had a homeowner’s policy with Metropolitan Property and Casualty Insurance Company which covered “direct loss” caused by fire but expressly excluded coverage for loss caused by either water damage or earth movement, including mudslides.  There had never been a mudslide in the area before the fire.  The legal question in the case was whether the mudslide was caused by the fire.  I.e. was there insurance coverage?

California Policies

In California, insurance policies are required to provide coverage whenever a covered peril is the “proximate cause” of the loss, meaning “efficient proximate cause,” or “the predominating or moving efficient cause.”

That may be mumbo jumbo to some of you (not me) but essentially California has a less vigorous standard for insurance coverage.  There is coverage if the landslide likely “would not have occurred if there had not been a fire.”

In California, if a reasonable juror “could find that the burning of the hillside was the predominating cause or the factor that set the mudslide in motion, there likely is coverage.

Arizona Insurance Coverage

Arizona law is different.  It requires that fire insurance policies conform to the so-called New York standard fire policy.

The key Arizona law question was whether the mudslide that damaged Stankova’s house was “directly” caused by the fire.  Stankova argued “yes.”  Of course.   Metropolitan claimed the policy unambiguously excluded water damage and earth movement so the fire was not a direct cause of the damage to the house.  Of course.


The Court of Appeals looked to the leading publication on insurance coverage and concluded that the fire directly caused Stankova’s loss “in an unbroken sequence and connection between the wildfire and the destruction of the house.”  A jury could conclude that the destruction of the house was caused by the fire, which likely caused the mudslide.

The federal Court of Appeals reversed the trial court, not necessarily ruling in Stankova’s favor, but allowing Stankova to take the case to a jury.  There was enough of a question about whether the fire directly caused the destruction of the home, so Stankova may take the case to a judge or jury.


Jim Porter is an attorney with Porter Simon licensed in California and Nevada, with offices in Truckee and Tahoe City, California, and Reno, Nevada.  Jim’s practice areas include:  real estate, development, construction, business, HOA’s, contracts, personal injury, accidents, mediation and other transactional matters.  He may be reached at porter@portersimon.com or www.portersimon.com.  

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