California Fair Plan Association v. Garnes

In California Fair Plan Association v. Garnes, 11 Cal.App.5th 1276 (May 26, 2017), the Court of Appeal reversed the trial court's judgment finding that California FAIR Plan Association ("FAIR") was only obligated to pay for the fair market value of the insured Michelle Garnes' house in connection with a fire which destroyed the kitchen in her home. The fair market value of the house at the time of the fire was $75,000 while the cost of repairing the kitchen, minus depreciation, was $320,549.00. In reaching its decision, the Court of Appeal interpreted Insurance Code sections 2051, 2070 and 2071.

Section 2051 of the Insurance Code provides that under an open fire insurance policy that pays "actual cash value," the measure of such cash value recovery shall be determined in one of two ways, depending on whether there has been a "total loss to the structure" or a "partial loss to the structure":