Law360 — What’s the last filing date for Los Angeles homeowners looking to sue insurers over denied fire damage coverage? It might depend on who you ask.
Considering legal ambiguities on tolling, along with the potential for overloaded lawyers and the risk of missed deadlines, there’s concern among some lawyers that suing after Jan. 7, 2027 — two years after the LA fires started on Jan. 7, 2025 — could prevent policyholders from getting their day in court.
While policies can differ, under California’s legally mandated fire policy, homeowners are guaranteed at least one year from the date of their loss to sue insurers before a suit can be barred. But for many LA fire survivors, there may be more ambiguity on the deadlines, because state law gives policyholders an extra year — 24 months rather than 12 — to sue insurers when a loss is connected to a state of emergency.
Shant Karnikian, an LA-based attorney with Kabateck LLP who handles fire claims on behalf of policyholders, said that the relevant case law does not clearly address tolling pauses in the context of a declared emergency. Ordinarily, tolling triggered by coverage claim filings doesn’t end until an insurer formally denies a claim in writing, increasing the time that policyholders have to weigh suits, and creating individual deadlines based on the particular facts of a policyholder’s claim history.
But attorneys including Shant say that the ambiguity could open policyholders to the risk of losing cases and foregoing smoke and fire coverage just because they missed a deadline. “So erring on the side of caution, generally the rule of thumb I like to use is that if you have any reason to want to pursue a lawsuit against an insurance company right now, arising out of the 2025 fires, just assume Jan. 7, 2027, is a deadline,” Karnikian said.
Amy Bach, the executive director of consumer group United Policyholders, said she’d encourage policyholders to directly ask their insurers to provide written clarification as to whether they plan to assert any time bars to filing suit. “We don’t want to fearmonger or scare people into filing suit,” she said. “However, we certainly don’t want people losing their rights.”
Dylan Schaffer, an attorney with Kerley Schaffer LLP who advises policyholders insured by the California FAIR Plan, said his firm is acting like Jan. 7 is a deadline for filing claims, just to be on the safe side. “If you represent this many people, you just make it simple,” he said.
Karnikian said that, in his view, tolling would still apply in the emergency context. But he’s reluctant to tell policyholders to fully rely on the tolling provisions set out in a “seminal” 1990 California Supreme Court decision. That case, Prudential-LMI Com. Insurance v. Superior Court, established what events start and end the tolling period within the one-year suit filing limitations period that determines when policyholders would need to sue their insurers over a loss. Karnikian noted that tolling provisions were never written into statute.
Another case, from the California Court of Appeals in 1998 — Singh v. Allstate Ins. Co. — helped establish that coverage denials must be “unequivocal” in order to bring a tolling period to an end, and thus start the clock on getting complaints filed. Insurance attorneys also note that what constitutes an “unequivocal” denial is itself a subject of legal wrangling.
Karnikian said further questions about tolling may arise for smoke-damaged standing homes — a type of claim that has caused major difficulties for both LA fire survivors and policyholders around California. Earlier this month, a suit filed by the politically connected LA businessman Austin Beutner over coverage for his family’s home was described by his attorney as a public-minded suit aimed at helping fire survivors with contaminated home claims.
The core of Beutner’s argument is that Chubb directed unqualified environmental consulting firms to narrow the scope of their tests and ignore evidence of contamination in concealed and exterior areas. But Beutner paid for his own toxin testing, and the results showed that Chubb used preferred vendors to justify limiting payouts, per the suit.
If an insurance company takes the position with a policyholder that it’s paid enough coverage — based on the findings of its own industrial hygienists — that could potentially constitute a denial, Karnikian said. But an insurer in that case could also be open to reconsidering its position based on additional testing provided by a homeowner.
“Those are the issues that often come up in the smoke damage types of claims, that make it a little more nuanced,” Karnikian said.
Bach said that if policyholders are still at loggerheads with their insurers over smoke damage coverage — particularly if a carrier is standing by its hygienists’ position — there’s no advantage in not consulting an attorney.
For policyholders weighing a potential suit, the prospect of a Jan. 7 deadline could be a strong incentive to seek legal representation in the coming weeks. Firms may see a rush of prospective clients’ cases and have to allocate limited resources, all while serving existing clients. Some attorneys have advised against filing too early out of concern a case might not be ready for court.
Schaffer said it was “complete nonsense” that policyholders would be out of luck in terms of filing suits after Jan. 7. Considering that so many claims are still being evaluated — or were being evaluated for long periods after homeowners made claims for Jan. 7, 2025, losses — the clock was paused for months for many would-be plaintiffs. “Most of these claims were tolled for the entire period of the claims handling,” he said.
A key issue with the Prudential-LMI decision, Schaffer added, is that it didn’t contemplate that many insurance disputes might concern the scope of a loss, or partial denials, rather than a clear denial that would serve to stop a tolling period. The problem, he said, “is that most insurance claims are not denied. Most insurance claims are paid, but that doesn’t mean there’s not a dispute.”
Karnikian suggested that, for policyholders considering bringing their claim to court, it could be worth talking to an attorney about the possibility of securing a tolling agreement with their insurance company. That’s a legal contract under which a policyholder and an insurance company could agree to pause the statute of limitations establishing suit filing deadlines.
Karnikian said that often his firm will approach insurance companies about such agreements. “We say: Look, I know we’re still negotiating. I know you’re still waiting on things, or we’re still unhappy with how much you’ve paid, but we don’t yet want to sue you in an effort to see if we can resolve it,” he said.