Posted on Burn Injury Blog / Blog / Can PG&E Be Held Accountable For The Butte Fire | California Third Party Liability Insurance Claims

Page Updated 12/10/2021

California Third Party Liability Insurance Claims – PG&E, Fire, and More


Third-party insurance protects policyholders from claims by other people as opposed to “first-party” insurance, which covers losses that the policyholder sustains directly.

In California, the most common types of third-party insurance are bodily injury car liability insurance, homeowner’s premises liability insurance, and medical malpractice insurance.

These coverage types protect a policyholder when another person gets injured as the result of the policy holder’s negligence.

What is “Third Party” Insurance?

Third-party insurance is a kind of liability insurance that a policyholder acquires as the “first party” from an insurance company, which is the “second party,” such as an auto insurance company.

The policy is between the first and second parties. The third-party insurance policy applies in instances when an outsider to the policy (a third-party) accuses the first party of creating a loss to a third party.

What Is the Significance of Third Party Insurance?

Third-party insurance is significant because it protects the insured policyholder against claims for damages and costs suffered by the uninsured who caused the harm, i.e., the claimant.

Essentially, it is a type of liability insurance because, in most cases, the insured party is liable for their damages or losses regardless of who caused them, and the third-party insurance protects against another party’s claims.

Recently, a major case of third-party liability claim is the Cal fire involving PG&E in Butte County, and several third-party liability claims began to spring up against them until they pleaded guilty.

Third-party insurance does not cover damages sustained directly by the insured as it only covers claims for damages sustained by a third party, not a party to the insurance arrangement.

Can PG&E be Held Accountable for the Butte Fire?

At a meeting with regulatory agencies, PG&E admitted it could bear some responsibility for the rapidly spreading fire in Butte County, which forced several sudden evacuations, burned through 274,139 acres, and destroyed 45 buildings.

While the company cannot get a prison or a jail term for the crime, they had to pay fines and settlements of claims under the state law, and they have to pay an estimated $4 million in fines, including the expenses related to the investigation of the District Attorney.

PG&E must also fund efforts to restore the water supply loss impacted by the loss of the Miocene Canal in Butte County that the wildfire destroyed for the next five years for the residents.

How Can a California Auto Liability Policy Protect You?

Third-party insurance entails the insurer defending and indemnifying policyholders in the event of covered claims, which implies that when a third party asserts a claim against the policyholder for a covered loss, the insurer must act in good faith and investigate the allegation promptly to ascertain who was at fault for the collision.

The insurer must also defend the policyholder (in court if required), and compensate claimants for damages (up to the policy limits) caused by a jury judgment or out-of-court settlement.

Third-Party Bad Faith in California

In California, third parties have a very limited power to sue another person’s insurer for bad faith. This implies that even if the other party caused the accident and the insurance refuses to pay damages, the injured third party has no cause of action against the insurer for bad faith as the insurer’s sole obligation is to the policyholder, not the other person.

Claim Your Free Consultation

Do you need legal assistance regarding a third-party claim? Contact us as soon as possible using the contact form on this page or calling us at (213) 596-9642 for a free consultation as we will require zero payment or charges.

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You deserve the best legal representation for your case. Reach out to us at our legal office in Los Angeles, CA, or other practice areas, and we will help you with a free case evaluation.

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