A California appellate court has ruled that the Western Home Insurance Company must pay an El Cajon California couple over $1.3 million in damages for bad faith insurance practices and breach of contract.

Cedar Fire destroyed couple's home

According to news reports, the 2003 Cedar Fire destroyed Patrick and Elsa Major's El Cajon, California home. The couple made a claim to their homeowners' insurance carrier, Western Home Insurance Company. However, the insurer delayed payments to the Majors and had knowingly insured their home for less than the cost of replacement. The Majors sued Western for bad faith insurance practices and breach of contract.

A jury awarded them $1.3 million in 2006. That amount consisted of $31,359 in personal property benefits, $450,000 in emotional distress damages, $189,000 in attorneys' fees and $646,471 in punitive damages. However, Western appealed the decision alleging that, among other things, the amount was excessive. Two years later, a California appellate court has upheld that decision and the Majors will finally collect from the insurer.

The fire insurance claims process

Like the Majors, many homeowners find collecting on a fire insurance policy to be an uphill battle. However, the claims process itself is fairly straightforward. Policyholders must first give notice of their loss to their insurance company. Once given, the insurance company must start to investigate the claim within 15 days and must accept or deny the claim within 40 days.

The insurer must explain all the coverages that are available to policyholders so that they have enough information to understand the claims process. Unfortunately, that doesn't always happen - and when the policy has burned in the fire, consumers may find themselves without any information at all. It's the company's duty to tell you what coverages you have, according to Bob Scott, a partner with the Advocate Law Group. "If they don't tell you, the first letter you should write to them is, 'Please explain to me in detail how every segment of this coverage operates and how it should operate for me when I go out to look for replacement materials. Please tell me in writing."

Unfortunately, Scott says that in his 30 plus years of experience, he's rarely seen an insurance company do a decent job in that area. If your insurance company has denied your valid benefits, contact an experienced bad faith fire insurance attorney to discuss your situation and evaluate your options.