San Diego will pay more than $6 million to a group of insurance companies that paid out property owners’ claims from January 2024 floods, after the City Council granted final approval Tuesday to a settlement.
It’s the first major settlement as the city litigates dozens of lawsuits over flooding that destroyed homes and displaced residents, most in the Chollas Creek watershed.
Separately from the insurers, thousands of San Diegans have sued the city, saying it caused the flooding and damage by failing to maintain its stormwater system. City lawyers have filed cross-complaints against some of them.
Under the settlement, 17 insurance carriers in four subrogation lawsuits will get a total of $6,326,330.75 from the city, according to a memo from the city attorney.
“The city settled with insurers first because that approach is standard in complex, large cases with numerous plaintiffs,” said a spokesperson for the city attorney. “The settlement represents a significant discount compared to the total amount the carriers paid.”
The city attorney’s office also said mediation sessions with individual flood victims are scheduled in the next month.
Tuesday’s vote to approve the insurers settlement was unanimous, 6-0, with council members Vivian Moreno, Raul Campillo and Marni von Wilpert absent.
Some council members said they haven’t forgotten about flood victims.
“We need to make sure we are continuing to remain focused on impacted families,” said Councilmember Henry Foster III, whose District 4 includes many of the areas hardest hit. “Most of these families are still navigating repairs, enduring financial strain and uncertainty, and some impacted did not have adequate insurance coverage at all.”
Council President Joe LaCava acknowledged that the city’s decisions when it comes to complex litigation “can be difficult for the public to understand.”
But attorneys for the flood survivors say the city’s settlement with insurers showed ordinary people weren’t priorities.
“If the city can act decisively when large insurers demand payment, it can and must act with the same seriousness toward the people who actually suffered the damage,” said one of the attorneys, Domenic Martini, in a statement.
It’s been more than two years since the flooding devastated San Diego communities, largely in working-class neighborhoods in the Chollas Creek watershed. Thousands of residents were displaced, and three deaths in East County were linked to the disaster.
Days after the storm, The San Diego Union-Tribune reported that years of deferred stormwater maintenance, coupled with an underfunded stormwater system, had left it vulnerable to flooding.
In the two years since, the city has performed more regular maintenance on channel segments that overflowed — but records from October show nearly half of all segments haven’t been maintained in at least 15 years.
The $6.3 million payment to 17 different insurers will come from the city’s public liability fund, a self-insurance program managed by the Risk Management Department. In the past two years, the department’s budget has climbed from $14.9 million to $20.4 million.
The insurers scheduled to share the $6.3 million are Palomar Specialty; Palomar Express and Surplus; Allied World Assurance; State Farm Mutual Automobile; Tokio Marine Kiln Holdings; Federated Mutual; Allstate; Allstate Northbrook Indemnity; Esurance Property and Casualty; Encompass; Integon National; Integon Preferred; National General; Insurance Co. of the West; Mercury; California Automobile; and Certain Underwriters of Lloyd’s London.