California sisters were offered $5,000 from insurance for storm damage. A jury awarded them $18 million

Two San Bernardino sisters who sued their insurance company for failing to pay to repair flood damage on their home are now $18 million richer after a jury found in their favor and imposed emotional and punitive damages on the insurance company.

The $18-million verdict announced April 18 by a San Bernardino County jury was a far cry from the $5,000 an insurance adjuster had initially offered the women.

Jennifer Garnier’s and Angela Toft’s home in Piñon Hills was flooded by rainwater in February 2019. Muddy water damaged their home, including the heating and air conditioning ducts. The rainwater also damaged the electrical system in their prefabricated home, according to their attorney, Michael Hernandez.

The sisters estimated they needed more than $100,000 to fix the damage, but when they filed a claim with their insurance company, American Reliable, an insurance adjuster instead offered Garnier and Toft only $5,000, Hernandez said.

The sisters sued American Reliable in September 2020 for a breach of contract, claiming that the adjuster did not conduct a proper inspection of the home. The home was uninhabitable, according to their lawsuit, but Garnier and Toft continued to live there because they did not have anywhere else to go.

Arizona-based American Reliable and its parent company, Pennsylvania-based Global Indemnity Group, did not respond to requests for comment.

But in court filings, American Reliable argued that Garnier and Toft repeatedly delayed inspection of their home and, after they filed their lawsuit, they were slow to respond to requests made by the company’s legal team. The women also repeatedly asked for all communication from the insurance company to be made in writing, Hernandez said.

More than four years after they filed their claim, American Reliable said an oversight was made on their end and they offered the sisters $140,000 in October 2023, just a few months before the trial was slated to start. The company explained to Garnier and Toft that they learned about the sisters’ living conditions while deliberating the evidence in the trial, Hernandez said.

“We argued that they had known about those conditions for a long time, but they made the decision to pay my clients because they knew that they would be facing a jury,” Hernandez said.

Garnier and Toft moved ahead with the trial and received estimates to repair their home, but postponed repairs until after the trial was over, because they would be forced to relocate during construction, according to Hernandez.

After a six-week trial, a jury found in favor of the women and awarded them each $3 million for emotional damages. They were awarded $2 million in punitive damages from American Reliable and $10 million in punitive damages from Global Indemnity Group, according to court documents.

The verdict arrives during a tumultuous time in California as insurance companies flee the Golden State, claiming they are unable to provide insurance to homes under threat of wildfires and other natural disasters.

While climate-change-related liability coverage did not overtly factor into Garnier’s and Toft’s case, their home was damaged by floodwaters from a Southern California rainstorm. Forecasts show that climate change will exacerbate flooding in California in the coming years.

California

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In March, State Farm announced that it would not renew policies for 72,000 property owners across the state, citing high inflation, catastrophe exposure, reinsurance costs and the limitation of decades-old insurance regulations as reasons for scaling back policies.

The California Department of Insurance announced a new strategy in September to streamline the rate approval process for insurers in the homeowners, auto and other markets. That process was last changed in 1988.