United Policyholders has been getting numerous reports in recent years about water damage claims being aggressively denied on specious grounds. We have also received information about a major insurer having a “secret” water damage initiative through which it is strategically denying water damage claims. UP volunteers are helping homeowners fight back when their water damage claims are denied and hold insurers accountable, and we in turn are helping those volunteers obtain relevant information.The facts in Nargizyan v. State Farm are consistent with the reports we’ve been getting. The insurer prevailed in a trial court opinion, so the policyholder appealled. In a 2025 amicus brief, United Policyholders addressed the fact that the insurer’s improper application of the “Continuous or Repeated Seepage or Leakage” (CRSL) would eliminate coverage for all water damage of any sort that occurs over any period of time whatsoever, and asked the Court to find in favor of the policyholder.
On April 15, 2026, the Second Appellate District, Division 7 ruled in favor of the policyholder in an unpublished opinion. The court’s decision described with unusual clarity an issue long observed by United Policyholders in which insurers use temporal water-damage exclusions to avoid paying claims on the basis of after-the-fact opinions from insurance-friendly vendors that recharacterize sudden losses as long-term ones. So, UP weighed in again with a letter brief to the Appellate District requesting that the decision be published as a source of guidance for trial courts across the state.
On May 14th, 2025, the same Court of Appeal issued a publication order. “We” (policyholders) prevailed and the Nargizyan decision can now be cited as a legal prcedent. It is our hope that this ruling will discourage State Farm and other insurers from continuing to misapply policy language, strategize to deny covered claims and defeat the reasonable expectations of insureds, and lead to better outcomes for property owners whose homes get damaged by water.