San Bernardino, Calif. – A jury awarded $18 million to two sisters from San Bernardino after they successfully sued their insurance company for failing to adequately compensate them for flood damage to their home. Initially offered a meager $5,000 by their insurer, the sisters’ fight culminated in a significant victory that highlighted ongoing tensions between homeowners and insurance companies in California amid increasing climate-related incidents.
Jennifer Garnier and Angela Toft, residents of Piñon Hills, faced severe rainwater flooding in February 2019 which left their home substantially damaged, including critical components like the heating, air conditioning ducts, and the electrical system. Represented by attorney Michael Hernandez, the sisters sought over $100,000 for repairs but were met with resistance from their insurance provider, American Reliable, which offered only a fraction of the required amount.
The case against American Reliable and its parent company, Global Indemnity Group, centered on the allegation that the insurer failed to conduct an appropriate evaluation of the property’s damage, according to court filings. Despite the precarious living conditions, the sisters continued to dwell in their damaged home as they had no alternative accommodations. The companies, based in Arizona and Pennsylvania respectively, did not offer comments on the case.
Tensions in the legal battle were evident as American Reliable accused Garnier and Toft of delaying the home inspection process and being uncooperative with the company’s legal team. Hernandez argued these were tactics to sidestep their responsibility. The insurer did eventually raise their compensation offer to $140,000 in October 2023, just months before trial, citing new insights into the sisters’ living situation gathered during pre-trial evidence review.
Hernandez conveyed in court that the offer was an attempt by the insurance company to avoid a jury trial, knowing full well the conditions the sisters had been enduring for years. However, the sisters chose to proceed to trial, delaying their home repairs until the conclusion of legal proceedings to avoid the necessity of relocating during the renovations.
After a six-week trial, the jury awarded each sister $3 million for emotional damages. Additionally, punitive damages were significant, with $2 million levied against American Reliable and $10 million against Global Indemnity Group as per the court documents.
This verdict comes at a time when California’s insurance market is becoming increasingly volatile. Insurers have been pulling back from the state, citing the rising threat of natural disasters such as wildfires, and the inadequacies of outdated regulations to address the complexities brought on by climate change. This retreat is exacerbated by high inflation, soaring reinsurance costs, and tougher environmental forecasts predicting more extreme weather conditions, which experts link to climate change.
The exodus includes major players like State Farm which recently declared it would not renew policies for 72,000 property owners across California. This withdrawal reflects growing concerns over the sustainability of insuring in a state prone to natural disasters.
In response, the California Department of Insurance has unveiled initiatives aimed at overhauling the approval process for insurance rates, which hadn’t been updated since 1988. This strategic shift seeks to stabilize the insurance market and ensure homeowners have access to necessary coverage in light of evolving global weather patterns and their impacts.