Desai

An insured sued his real property insurer and insurance agent for breach of contract and negligence, claiming that the defendants failed and refused to provide him with the 100 percent replacement cost coverage he had requested and which the agent assured him he was receiving. On demurrer, the trial court concluded that the insured could not state a cause of action against his insurer because the policy limits were less than the cost of replacing structures destroyed by an earthquake and fire. We conclude that the reasonable expectations of the insured would be that he was completely covered for the replacement cost of the structures, regardless of the policy limits. Accordingly, we reverse the court’s order of dismissal in favor of the insurer.

Allegations

Narendra Desai purchased real property in Santa Monica in 1991. To safeguard his investment, Desai sought to purchase earthquake, fire and hazard insurance. Desai informed an insurance vendor, Carol Sacramone Insurance Agency, that he wanted 100 percent coverage for the cost of repairing or replacing improvements to the property, including any increases for inflation. Sacramone told Desai that Farmers Insurance Group…