Recouping Losses from California Wildfires

Insurance attorneys offer advice for wine industry firms impacted by disaster

by Kate Lavin
wine california fires wineries vineyards insurance records
Legal professionals specializing in insurance advise clients to keep detailed records of fire-related purchases and conversations with their insurance company.

San Rafael, Calif.—As business owners affected by the Northern California wildfires return to the workplace, insurance specialists are fielding questions such as: “Am I eligible to claim losses even if there wasn’t damage to my property?” and “Do I have to accept grapes from areas that experienced smoky conditions?”

According to Linda Kornfeld, vice chair of the insurance recovery practice group at the Blank Rome law practice in Los Angeles, Calif., it is never too early to contact your insurance company if you believe you might have a claim. Kornfeld encourages business owners and managers to locate their insurance policies as soon as possible and try to get approval before making any large expenditures. Additionally: Keep all receipts for purchases related to the fires.

Talking to your insurance company

    Checklist for Fire Insurance

  • • Have computerized backup copies of insurance policies available.
    • Contact your insurance company immediately and ask for an advance, if needed.
    • Keep detailed notes of your communication with the insurance company, money spent and money lost due to the inability to conduct business.
    • Provide information requested by adjuster, but avoid trying to characterize the loss yourself.

David Smith, insurance and risk-management consultant for Farella Braun + Martel LLP, said insurance adjusters are likely going to be overwhelmed by the large number of claims they’re handling and advises business owners to keep an open line of communication.

While the insured should provide adjusters the information requested, legal experts advise clients not to go overboard on the details.

“Stick to the facts rather than characterizing the facts,” Kornfeld advised. “For example, ‘We had 10 barrels of wine destroyed,’ as opposed to how you might value the wine that was in the barrels. It should just be facts without hypothesizing or projecting the worth.” She said offering up such details could actually undermine an insurance claim and result in a lower payout.

Kornfeld also said it’s important to keep detailed records of your conversations with the insurance company, adding: “Claims that are submitted early in these events tend to be paid early. Delay is not your friend in this circumstance.”

Government assistance
Alana Joyce, associate attorney at Hinman & Carmichael LLP, said there are many resources available for wineries that lost wine in the fires or were forced to move their wine inventory.

“You can make a claim for any type of alcohol if you have paid federal excise tax on it,” Joyce said, adding the TTB is waiving tax penalties to those affected by the fires. “That applies to manufacturers, retails and distributors; you can get a refund or an allowance of credit.”

The California state Board of Equalization also offers emergency tax relief and an extension of up to three months, according to the law firm.

Finally, vineyard and winery owners may be able to collect on crop insurance for inability to harvest or damage caused by smoke taint. The U.S. Department of Agriculture advises farmers to contact their insurance company immediately to get an adjuster to the property. And while they’re waiting, “Do not destroy evidence that is needed to support your claim without clear direction from the insurance company, preferably in writing.”

Loss of income

After the 2015 Valley Fire in Lake County, Calif., some insurance companies agreed to advance a portion of claims on an emergency basis, but “the onus is on the insured to ask for that,” Smith said.

Many business-interruption policies have ingress/egress coverage that applies when damage elsewhere prevents customers from getting to the business and spending money.
“Any time the business is shut down, whether it’s actually suffered damage or not, the business should be tracking all costs it’s incurring very carefully and keeping records,” said Tyler Gerking, partner at Farella Braun + Martel. “Those kinds of losses—even if there wasn’t actually damage to their property—might be covered, so keep in a file any costs they’re incurring and sales they’re losing.”

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