Wildfire Liability - How a Mistake Can Turn into a Bankruptcy

February 05, 2019

Wildfires are often seen as a force of nature, but many actually begin with human actions. According to the National Interagency Coordination Center, wildfires burned more than 10 million acres in 2017. In 2018, the Camp Fire became the deadliest fire in the California’s history, devastating the town of Paradise and killing at least 85 people.

If you ignite a wildfire, you could be the cause of extreme suffering. You could also be legally and financially liable.

The Causes of Wildfires

Some wildfires are caused by natural events, such as lightning. Others, however, are caused by people. In fact, most of them are. According to an analysis conducted by the University of Colorado at Boulder, 84 percent of all wildfires are caused by humans.

When individuals toss cigarette butts on the ground, fail to put out a camp fire properly or play with fireworks, they risk starting a wildfire. Companies can also contribute to wildfires – for example, when electrical equipment malfunctions.  

Wildfires and PG&E

Pacific Gas and Electric Company (PG&E) is a utilities company providing natural gas and electric service in California. The company has been accused of causing multiple wildfires. This includes the Camp Fire in 2018, which may have been started by one of its power lines, as well as additional wildfires that occurred in 2017.  

It was recently announced that PG&E had been cleared of liability regarding the Tubbs Fire of 2017. Despite this development, the company could still be held liable for other fires. Business Insurance reports that the company’s wildfire liability was previously estimated at around $30 billion, but that could be cut in half now that it’s been cleared of the Tubbs Fire. That still leaves $15 billion, and the company is facing lawsuits from thousands of individuals plaintiffs. Given this, it should not be surprising that PG&E is filing for bankruptcy.

Other Wildfires 

The story of PG&E may be exceptional in that it involves so many wildfires, but others have also been held legally and financially responsible for their role in starting wildfires.

  • A teenager playing with fireworks caused the Eagle Creek Fire, which devastated parts of the Columbia River Gorge in Oregon and Washington in 2017. According to the Oregonian, a judge ordered him to pay more than $36 million in restitution, an amount that the teen cannot actually pay. He will also have to complete 1,920 hours of community service.
  • Washington Post reports that the Moonlight Fire, which occurred in California in 2007, is believed to have been started by a bulldozer operated by an employee of a subcontractor of Sierra Pacific Industries (SPI). Following the fire, the subcontractor went out of business, and SPI became involved in a complicated legal battle.   
  • The Lake Legion Fire burned 57,000 acres in North Dakota in 2017. According to Rapid City Journal, landowners are suing a telephone company over the fire, which began after a windstorm knocked a tree onto a powerline. The telephone company argues the fire was an act of God.

The threat of wildfires is not going away. Companies and individuals must remain vigilant of the danger and do everything possible to minimize risk. On a personal level, educate your kids, control vegetation and debris and be cautious when using lawn and farm equipment. If you own a business, discuss this exposure in your safety meetings and train your employees in preventative measures.

Need help with risk management? Contact your Heffernan Insurance broker.