Robert Westmoreland v. Fire Insurance Exchange

(Insured Limited to Cost of Replacing Building at New Location as Opposed to Estimated Cost of Replacement at the Original Insured Location)

(April 2022) - In Westmoreland v. Fire Ins. Exch., 73 Cal.App.5th 269 (December 28, 2021), the California First District Court of Appeal reversed the trial court's order denying Fire Insurance Exchange's ("FIE") demurrer to Robert Westmoreland's complaint for breach of contract and bad faith. The Court of Appeal instructed the trial court to vacate its order. The parties' dispute related to the cost of rebuilding a rental building after it had been totally destroyed by fire. The building was insured under an "open policy" issued by FIE. Under the terms of the policy, FIE was obligated to indemnify for fire loss with a coverage limit of $372,000 under Coverage A-Dwelling. The policy provided up to 125% of the Coverage A limit for "Extended Replacement Cost" coverage, i.e., $465,000 (1.25x $372,000). As such, the policy promised