Be careful when relying on insurance coverage to contain utilities’ wildfire risks - Electric Light & Power

Be careful when relying on insurance coverage to contain utilities’ wildfire risks - Electric Light & Power: The recent wildfires in California have been devastating to life and property. Plaintiffs that lost property are attributing at least some of the responsibility to utility and power companies, which also may face subrogation claims from insurers that have paid property and business owners for first-party losses. If it is determined that the wildfires resulted from utilities’ equipment failures, utilities potentially face claims for billions of dollars. Although California’s governor recently signed a measure allowing electric companies to pass on to its customers some of the costs of future legal settlements stemming from 2017 wildfires, the recent 2018 wildfires have exacerbated an already serious risk for electric utilities, leading major utilities to file for bankruptcy protection. Liability insurance programs should help defray some of the costs, but utilities should be mindful of the potential challenges that insurers may raise to restrict insurance coverage for wildfire risks.