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This week a California Court of Appeals overturned the District courts’ decision that California FAIR Plan’s policy of providing the cost of repairing a lower income fire-damaged home wasn’t required, even though a similar loss in a wealthy neighborhood would have been covered. The case is California Fair Plan Association v. Garnes, No. 16-cv-280 T (W.D.N.Y. May 7, 2017).

In 2011, the Garnes’ home in Richmond, CA was seriously damaged by a fire. Marlene Garnes had purchased a fire insurance policy for the property with a policy limit of $425,000 from the California FAIR Plan Association. The FAIR Plan Association is California’s insurer of last resort. The disputed issue is how much coverage Garnes is entitled to under her fire insurance policy. The insured argues that she should receive the amount that it would take to repair her house, minus depreciation. The parties agreed the net amount of cost to repair would be $320,000. FAIR contends in the case at hand that the policy they had issued to the insured, as well as the Insurance Code, allow it to pay the insured the lesser of that amount or the fair market value of the house, which at the time of the fire was $75,000.

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