Flood and Mudslide After Wildfire: Why Your Homeowner Policy Covers It
When wildfire causes subsequent flooding, mudslides, or earth movement, your homeowner policy covers the damage under California's efficient proximate cause doctrine. CDI Bulletin 2025-3 explains why.
Important Notice
This article is provided for general educational purposes only and does not constitute legal advice. Insurance policies, regulations, and case law can vary significantly based on individual circumstances. Consult a licensed attorney for advice about your specific situation.
The Short Version
Your homeowner policy excludes flood. It excludes earth movement. It excludes mudslide. But it covers fire. And when a wildfire is the reason the flood happened, or the reason the hillside collapsed, California law says your loss is covered. The excluded peril did not act on its own — the fire set the entire chain in motion. Under the efficient proximate cause doctrine, the dominant cause controls, and the dominant cause was a covered peril.
This is not a gray area. The California Insurance Code establishes it. The California Supreme Court has confirmed it repeatedly. And in February 2025, the Department of Insurance issued Bulletin 2025-3 reminding carriers — again — that they cannot deny these claims by pointing at an exclusion while ignoring the fire that caused the loss.
The legal framework is straightforward: Insurance Code section 530 says the insurer is liable when a covered peril was the proximate cause, even if an uncovered peril was a remote cause. Section 530.5, enacted in 2018 after the Montecito mudslides killed 23 people, reinforces the point. The California Supreme Court in Julian v. Hartford Underwriters Ins. Co.(2005) called efficient proximate cause the “preferred method” for resolving first-party disputes involving multiple perils. Garvey v. State Farm (1989) held that coverage exists when the covered peril is the predominant cause, even if an excluded peril contributed. Howell v. State Farm (1990) applied this directly to post-fire mudslides and held the earth movement exclusion unenforceable when fire was the efficient proximate cause.
Despite all of this, carriers still deny these claims. They point to the exclusion, hope you do not know the law, and move on. The CDI issued Bulletin 2025-3 because this is still happening after the January 2025 Palisades and Eaton fires. Below is the full text.
Full Text: CDI Bulletin 2025-3
California Department of Insurance — Bulletin — February 4, 2025
Coverage of Flood, Mudslide, and Earth Movement Claims Relating to Recent Wildfires
BULLETIN 2025-3
TO: All Property and Casualty Insurance Companies Providing Homeowners and Commercial Property Insurance in the California Wildfire Areas and Other Interested Persons
FROM: Insurance Commissioner Ricardo Lara
DATE: February 4, 2025
RE: Coverage of Flood, Mudslide, and Earth Movement Claims Relating to Recent Wildfires
This Bulletin is to remind insurers of their obligation to comply with existing law regarding the “efficient proximate cause” doctrine. Under the “efficient proximate cause” doctrine established in the California Insurance Code and articulated by California courts, insurers may not exclude losses caused by flooding, mudflow, debris flow, mudslide, landslide, or other similar events if the facts establish that a wildfire (a covered peril) was the efficient proximate cause of the event.
California Insurance Code section 530 states: An insurer is liable for a loss of which a peril insured against was the proximate cause, although a peril not contemplated by the contract may have been a remote cause of the loss; but he is not liable for a loss of which the peril insured against was only a remote cause.
Insurance Code section 530 sets forth the efficient proximate cause doctrine, an interpretive rule for first party insurance disputes. The California Supreme Court and other California Appellate Courts have stated that efficient proximate cause doctrine is the “preferred method for resolving first party insurance disputes involving losses caused by multiple risks or perils, at least one of which is covered by insurance and one of which is not.” Julian v. Hartford Underwriters Ins. Co., 35 Cal.4th 747, 753 (2005).
Under the efficient proximate cause doctrine, “[W]hen a loss is caused by a combination of a covered and specifically excluded risks, the loss is covered if the covered risk was the efficient proximate cause of the loss, but the loss is not covered if the covered risk was only a remote cause of the loss, or the excluded risk was the efficient proximate, or predominate cause.” Julian v. Hartford Underwriters Ins. Co., at 750 (citing State Farm Fire & Casualty Co. v. Von Der Lieth, 54 Cal.3d 1123, 1131-1132 (1991).)
In the case of Garvey v. State Farm Fire & Casualty Co., 48 Cal.3d 395, 406 (1989), the California Supreme Court held that there is coverage only if the covered concurrent cause is the efficient proximate cause or predominant cause for the loss. The mere fact that a cause is concurrent does not, in itself, provide coverage if the other concurrent cause is excluded. “Frequently property losses occur which involve more than one peril that might be considered legally significant. The task becomes one of identifying the most important cause of the loss and attributing the loss to that cause.” Id. at 406.
In Howell v. State Farm Fire & Casualty Co., 218 Cal.App.3d 1446 (1990), the property owner made a claim for landslide damage to her property following heavy rains. The insurance company denied the claim because the policy excluded coverage for earth movement and water damage. The property owner presented expert testimony that the landslide occurred due to a fire, which was covered under the policy and which destroyed vegetation on the slope the summer before the landslide. The Court of Appeal concluded that an insurance company providing coverage under a property insurance policy may not contractually exclude coverage when an insured peril (such as fire) is the efficient proximate cause of a loss, regardless of other contributing causes. Id. at 1448. The Court found that because fire was the efficient proximate cause of the mudslide, the policy exclusion for damage caused by mudslide was not enforceable. Id. at 1452.
If it is established that a recent wildfire or another peril covered by the applicable policy was the efficient proximate cause of the damage resulting from subsequent mudslides and other similar events following the fire, such damage is covered by the policy regardless of any exclusion in the applicable policy. Indeed, in 2018 following the Montecito mudslides, the California State Legislature approved and the Governor enacted Insurance Code section 530.5 to reinforce this point. As the Senate Floor Analysis for the bill provides, the author drafted Senate Bill 917 (Jackson, Chapter 620, Statutes of 2018), which ultimately became section 530.5, to “help prevent the confusion in situations such as Montecito where homeowners are left to wonder whether the loss of their largest single asset – their home – will be covered by insurance.”
Once the insured shows that an event falls within the scope of basic coverage under the applicable policy, the burden is on the insurance company to prove a claim is specifically excluded. Garvey v. State Farm Fire & Casualty, supra, 406.
Based on the foregoing, insurance companies should not deny such claims before diligently investigating the cause of loss and carefully considering the facts.
What This Means for Policyholders
The Bulletin is short because the law is clear. The CDI is not announcing a new rule. It is reminding carriers of an existing one that some of them continue to ignore. Here is what it means in practice:
If your home was damaged by flooding, mudslide, debris flow, or earth movement after a wildfire:
- Your homeowner policy likely covers it if the wildfire was the dominant cause of the subsequent event. The fire destroyed vegetation and destabilized the hillside. Rain mobilized the unstable material. The flood or mudslide was the result. That is a single causal chain with fire as the efficient proximate cause.
- The exclusion for flood, earth movement, or mudslide does not override this analysis. Under California law, an exclusion cannot be used to deny a loss when the efficient proximate cause was a covered peril.
- Anti-concurrent causation (ACC) language in your policy does not change this result. California does not enforce ACC clauses when they conflict with the efficient proximate cause doctrine.
- The burden shifts to the insurer once you show the loss falls within basic coverage. As the Bulletin notes, citing Garvey, it is the carrier's job to prove the exclusion applies — not your job to prove it does not.
What to Do If Your Claim Is Denied
If your insurer denies a post-wildfire flood or mudslide claim by citing the earth movement or flood exclusion without addressing the efficient proximate cause doctrine, they are not following the law. Take these steps:
Professional Guidance Recommended
The legal strategies discussed below should be pursued with the guidance of a licensed attorney experienced in insurance coverage disputes. A Public Adjuster can assist with documentation, claims handling, and negotiation. If you need help finding a qualified professional, contact us for a referral.
- Get the denial in writing. Under California's Fair Claims Settlement Practices Regulations, the insurer must cite the specific policy provision it is relying on. A denial that says “flood exclusion” or “earth movement exclusion” without discussing whether fire was the efficient proximate cause is legally insufficient.
- Document the fire-to-loss causal chain. Cal Fire burn perimeter maps, USGS debris flow hazard assessments, National Weather Service post-fire flash flood warnings, and county geological surveys all establish that the wildfire created the conditions for the subsequent flood or mudslide.
- Cite the Bulletin and the law. With attorney guidance, respond to the denial citing CDI Bulletin 2025-3, Insurance Code sections 530 and 530.5, and the applicable case law (Julian, Garvey, Howell). Make clear that the carrier must evaluate the predominant cause, not simply identify an excluded peril in the chain.
- File a CDI complaint if necessary. If the insurer maintains its denial after you have put them on notice of the law, file a complaint with the California Department of Insurance. See our guide on filing a CDI complaint. The CDI has been particularly attentive to post-wildfire denials that ignore the efficient proximate cause doctrine.
- Engage a licensed Public Adjuster or coverage attorney. These claims involve causation analysis, policy interpretation, and regulatory requirements. A professional who handles these disputes regularly can build the case needed to overturn an improper denial.
Related Articles
- Mudslide After Wildfire: Why Earth Movement Is Covered When Fire Is the Cause — Our comprehensive guide to the efficient proximate cause doctrine in post-wildfire earth movement claims, including the full causal chain analysis, anti-concurrent causation clauses, and the Montecito example.
- California Wildfire Claims Guide — Complete overview of wildfire insurance claims, including smoke damage, coverage breakdowns, and insurer tactics.
- Anti-Concurrent Causation Clauses — Why California does not enforce ACC language and what that means for your claim.
- California Fair Claims Settlement Practices — Your rights under California's claims handling regulations.
- How to File a CDI Complaint — Step-by-step guide to filing a complaint with the California Department of Insurance.
Post-Wildfire Flood or Mudslide Damage?
If your home was damaged by flooding, mudslide, debris flow, or earth movement after a wildfire, you likely have coverage under your homeowner policy. A licensed Public Adjuster can document the causal chain, present the efficient proximate cause argument, and ensure your claim is handled under the correct legal framework.
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