The insureds' home was damaged by a flood in Ross, California, on December 31, 2005. See Cook v. USAA General Indemn. Co., No. C-07-4042, 2009 U.S. Dist. LEXIS 45490 (N.D. Cal. June 1, 2009). The home was insured under a National Flood Insurance Program policy issued by USAA.
The home was located in a flood zone forty feet from Ross Creek, and valued at $350,000. After the flood, the kitchen floor began to bulge over the central beam and floor tiles in the kitchen cracked. Cracks also began to appear in the plaster of certain areas of the house. Windows and doors became difficult to open and close.
USAA's claims adjustor initially concluded the total damage was $13,075.47. After subtracting the $5,000 deductible, USAA issued a check for $8,057.47. After a second USAA inspector visited the property, USAA issued another check for $4,180.32 for cleanup costs. A third check in the amount of $12,126.11 was issued for supplemental repair costs for electrical, furnace and water mitigation expenses. In total, USA issued $24,381.00 for damages to the house and cleanup, and the $5,000 deductible was exhausted.
The insureds sought not only to repair the home, but to significantly redesign it, including raising it in order to protect against future flooding. The insured wrote to USAA on July 24, 2006, notifying the insurer that they planned to begin repairs and renovations around August 4, 2006. USAA conducted another inspection on August 4, 2006, while renovations were underway. USAA's structural engineer reported it was highly unlikely that the flood caused any structural damage to the house.
On December 22, 2006, the insureds completed a proof of loss form, requesting a total of $220,039.73 for flood damage. USAA denied the proof of loss. Although additional information was requested, the insureds were unable to respond to many of the requests and they were often slow in their responses.
The insureds sued for breach of the policy. The court agreed with insureds' expert that the flood caused the cracking and bulging, and damage to the doors and windows.
The court rejected USAA's argument that the insureds failed to cooperate. The testimony demonstrated the insureds kept frequent contact with USAA and gave sufficient notice of their intent to work on the house. Moreover, the December 22, 2006 proof of loss sufficiently described which portions of the house were damaged by flood. Because USAA had not issued any money to cover the floor, windows, doors and walls of the house, USAA was in breach of the flood policy.
Meticulously combing through the record and considering competing estimates submitted by the parties, the court determined USAA was obligated to issue an additional payment of $52,690.24 for damage to the house caused directly by flood.
