The Case Of Stephens & Stephens V. Fireman's Fund Insurance Co

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Court of Appeal Holds Insured Excused from Complying with Policy Terms Under Prevention Doctrine Where an insurer denies a claim and fails to provide funding for repairs, the insured is excused from failing to make repairs as soon as reasonably possible under the prevention doctrine. This is the recent holding of the California Court of Appeal in the case of Stephens & Stephens XII, LLC v. Fireman’s Fund Insurance Co. (2014) 231 Cal.App.4th 1131. In Stephens, Plaintiff procured an insurance policy covering loss from property damage on a building it owned from Fireman’s Fund Insurance Co. Three days after the policy became effective, Plaintiff discovered the property had sustained substantial damage from burglars who had stripped the property of electrical and conductive materials. Plaintiff thereafter sought reimbursement for the damage. The insurer delayed resolving the claim resulting in Plaintiff filing suit. The insurer never formally accepted or denied coverage until five years after the claim when one month before trial is denied coverage. Under the policy, Plaintiff could either recover the full cost of repairing the damage if repairs were actually made, or recover the depreciated value of the property. As of trial, Plaintiff had not actually repaired the property. Nonetheless, it was awarded the full cost of repairs by the jury. The jury further awarded lost business income, which was not within the terms of the policy, but declined lost rent, which was within

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