The McMillan Law Firm, APC

Your Rental Property Claim: Why Insurers Treat Investment Properties Differently (And More Harshly)

2026-07-28T06:41:45Z

You acquired your rental property as an income-producing asset, not as the subject of a protracted dispute with your own insurance carrier. Yet when a fire, leak or storm damages the building, many California landlords discover that insurers subject investment property claims to a degree of scrutiny that owner-occupied claims rarely attract. Adjusters may question the cause of loss, the condition of the structure and even your motives as a policyholder. Understanding the reasoning behind this heightened skepticism can help you anticipate obstacles and push back when a claim decision seems unjustified.

Why rental claims face extra scrutiny

Insurers view investment properties as business risks, not just homes. They worry that financial pressure could tempt an owner to inflate a loss. That concern shapes how adjusters review your file from day one. Landlords also face practical hurdles that homeowners rarely encounter:

Delayed discovery: You do not live on-site, so leaks or roof damage can go unnoticed for months.
Vacancy clauses: Many policies limit coverage when a unit sits empty beyond a set period.
Tenant damage disputes: Adjusters may label losses as wear and tear rather than covered events.
Lost rental income: Payouts for lost rent often face caps and heavy documentation demands.

Each of these issues gives an insurer a possible reason to reduce or deny payment. These tactics matter because your rental income may stop while repairs stall. Mortgage payments, taxes and upkeep continue whether or not the insurer pays. A delayed or reduced payout can turn one loss into lasting financial harm.

How California law limits depreciation

Adjusters sometimes apply steep depreciation to rental buildings. They may argue that tenant use lowered the value of the entire structure. California law restricts this practice. Under California Insurance Code § 2051, an actual cash value payout for a partial loss must reflect the condition of the damaged components before the loss. An insurer cannot apply one blanket depreciation rate to your whole building. It must assess the specific flooring, roofing or other items that were harmed.

Getting a fair result on your claim

Insurers hold rental claims to a tougher standard through fraud concerns, vacancy rules and aggressive depreciation. California law still gives you real tools, including limits on how depreciation can apply. Knowing these rules helps you spot a claim decision that may not be fair. You can review how insurance claim disputes typically unfold before you respond to a low offer. If your insurer disputes the cause of loss or the payout amount, an attorney can help you understand your options.

Taking action when boundary disputes lead to neighbor harassment

2026-05-20T11:24:36Z

Boundary disputes sometimes arise when one neighbor intends to erect a fence or expand their garage. It may quickly come to light that they actually disagree with an adjacent property owner about where the boundary between the parcels falls. After a few conversations that do not prove fruitful, the matter may quickly spiral into harassment and inappropriate conduct. One neighbor might put up abusive signs in their yard making cruel claims about another, violate noise ordinances or intentionally intimidate their neighbor. In scenarios where a neighbor becomes abusive and engages in consistent harassment, property owners may need to take legal action.

Boundary disputes aren't the only cause of neighbor harassment

Neighbor harassment often begins with a dispute about boundary placement that affects lawn maintenance or planned property improvements. However, one neighbor can initiate a campaign of harassment against another over a variety of different perceived slights. Some of the most common reasons for neighbor-on-neighbor harassment include:

Disputes about daily schedules
Frustration over lawn maintenance
Complaints about using a property for business purposes
Leaving too many vehicles in the driveway
Disrespect when parking on the street
Issues with trees, bushes and other vegetation
Mistreatment or neglect of pets
Disagreements about access or easements

Boundary disputes are relatively easy to resolve when compared with many of those other sources of conflict. A survey or a quiet title lawsuit can be enough to either validate the placement of the boundary between the parcels or update the legal description of one property. A judge can prevent the installation of a fence at the boundary line, order the removal of an encroaching improvement or award one property owner financial damages. Even if litigation resolves a boundary placement dispute, it may not actually end harassment. It might be necessary for a neighbor experiencing constant harassment to file a request for a civil harassment restraining order. Proof of a familial or romantic relationship is not necessary for a restraining order if there is documentation of ongoing abusive behavior or threats. A restraining order can provide protection from continued misconduct, as one neighbor can call the police on the other if they return to their inappropriate habits. Discussing a boundary dispute and the conduct of a neighbor with a real estate attorney can help people to better understand their options. The civil courts offer multiple forms of legal protection for those enduring harassment and abuse because of a disagreement with a neighbor.

Tip pooling: is your California employer illegally taking a cut of your gratuities?

2026-02-12T17:57:24Z

In the California service industry, tips are often the difference between struggling and thriving. While "tip pooling"—the practice of sharing gratuities among staff—is a common and legal practice, it is governed by some of the strictest laws in the country. If your employer is dipping into the pool or distributing funds to the wrong people, they aren't just being unfair; they are breaking the law. In California’s service industry, tips can make a substantial difference in a worker’s livelihood. In this context, there are common and lawful practices like “tip pooling”, which is sharing gratuities among staff. However, they are regulated by some of the strictest rules in the nation. If your employer is taking from the pool or giving money to the wrong people, they are violating the law. Under state law, every gratuity is the sole property of the employee or employees who received it. This means that as soon as a customer leaves a tip on a table or on a credit card slip, the money belongs to the staff, not the employer.

When is tip pooling illegal?

California courts have held that employers may require tip pooling, but only when the pool meets certain rules. Your employer may be breaking the law if any of the following happens:

Managers or owners take a share: This is the most common issue. By law, anyone with the power to hire, fire, or supervise (an “agent” of the employer) is strictly barred from joining a tip pool, even if they also provided direct service to the table.
Tips used to offset wages: In California, employers cannot apply your tips as a “credit” toward minimum wage. You must be paid the full state/local minimum wage in addition to your tips.
Deductions for processing fees: If a customer leaves a 20% tip on a credit card, the employer cannot deduct the 3% card processing fee from your tip. You must receive the full tip amount.

Although recent federal changes can allow including kitchen staff in pools when the employer does not take a tip credit, California law still emphasizes the “chain of service.” If people with no real link to the customer’s experience are receiving part of your tips, that can be a warning sign.

What should you do if your tips are being stolen?

Many workers fear that speaking up will lead to retaliation. However, California law also protects whistleblowers. If you suspect your employer is skimming tips or forcing you to share with a manager:

Keep records: Write down your hours, the tips you earned, and what your paycheck shows you received.
Review the policy: Your employer should clearly explain how the tip pool is calculated.
Get legal help: Tip issues often impact many employees. These cases may become group lawsuits so everyone affected can recover lost pay.

Your gratuities belong in your pocket, not the company’s bottom line. If you believe your rights have been violated in a California restaurant, bar, or hotel, you can talk to a lawyer so they can review your case.

3 kinds of insurance bad faith that could affect wildfire claims

2025-02-18T11:14:56Z

Wildfires are a major public safety issue in California. They are also a leading cause of large insurance claims. The recent wildfires destroyed entire communities and displaced thousands. As property owners take stock of the damage and start thinking about the future, they may need to navigate a complex insurance claim. They need insurance funds to rebuild or repair their homes and replace their personal possessions. Unfortunately, insurance companies have a poor track record of providing generous support after large-scale destruction. Frequently, the opposite occurs. Insurance companies desperately try to limit what they pay when many people need support at once. Bad faith insurance practices may complicate the claims process for thousands of displaced individuals. What types of potentially actionable conduct might leave policyholders without the support they deserve from an insurance company?

Delays or stonewalling

Insurance companies have an obligation to respond to claims in a timely manner. If they need to investigate a claim, that also requires prompt action. Insurance providers may try to drag out the claims process for months in the hopes of people giving up. Other times, insurance adjusters may simply stop responding. Stonewalling or refusing to negotiate is a common tactic that can cross the line and constitute bad faith insurance practices if it unfairly deprives a policyholder of the coverage for which they previously paid.

Unfair claim denials

Insurance companies frequently look for any minuscule excuse to deny a claim. They may also try to find minor issues that justify significantly limiting the compensation provided to the policyholder. Insurance statutes require that companies uphold their policies by paying out appropriate claims in good faith. Denying valid claims and looking for questionable excuses for doing so is a common bad faith practice that leaves consumers who have paid thousands for coverage without the support they deserve.

Offering unreasonably low settlements

Settling a claim is often beneficial for the insurance company. Instead of continually making small distributions as expenses arise, they agree on one lump-sum payment amount. Typically, that amount is well below the policy limits and may also be far less than the total amount of the losses sustained. Even if the settlement is low and the policyholder has tens of thousands of dollars in additional coverage, the insurance company usually eliminates its ongoing liability in a settlement scenario. Individuals navigating large insurance claims have the right to secure legal representation. Given the likelihood of bad faith insurance practices occurring during the rebuilding process after the recent wildfires, homeowners may be in particular need help as they negotiate their insurance claims. Securing professional advocacy can help people counter bad faith insurance practices and hold companies accountable for their refusal to honor the terms of their policies.

How do I negotiate a fair eminent domain settlement?

2023-05-25T18:19:39Z

When you own a property, you reserve the right to use it as you fit as long as you are operating within the law. This is what most people believe, and they are mostly right – that is until the government decides that they need part of or your entire property. Basically, the law allows the government (state or federal) to claim private property for government or public use. However, the property owner must be fairly compensated in return. This power is known as eminent domain.

Understanding eminent domain basics

The U.S. Constitution grants government agencies like the Department of Housing and Urban Development (HUD) the power to claim and convert private property to public use. In return, the government agency in question must compensate the property owner at a fair market rate. So how do you negotiate a fair settlement when giving up your property to the government?

Take things seriously from the onset

The government agency in question must provide adequate notice that it intends to claim your property through eminent domain. Upon receiving the notice, you need to get down to the following:

Carefully read the appraisal to understand how they reached a settlement offer. This will help you determine whether the offer is fair or not
Obtain your own appraisal. This will help you strengthen your negotiating power
Understand why you are being compensated. Most often, you will be compensated for the value of your property. However, you should also find out if you will be compensated for the foreseeable damages to the property you are left with. And this is where understanding the construction plans come in.

Remember, the more information you have about the government’s offer and the project in question, the more likely you negotiate a better settlement.

Protecting your interests

When the government has an interest in some or all of your property, you may feel like there is nothing you can do about it. This is not true. Acquainting yourself with California eminent domain laws can help you negotiate and get the most out of the situation.

5 signs of a good business partnership

2023-05-12T18:23:11Z

A business partnership can be the greatest thing you can do to ensure your business is successful. It’s not going to be easy to find the right partner, however. Of course, you have to find someone that works well with you -- but it may be fairly easy to spot a few good signs that you found the right person for the job. Here’s what you should look for:

1. Strong communication

Communication is essentially no matter who you’re working with, but especially with someone who’s managing your business alongside you. Your business partner could show that they’re good at communicating if you don’t have to question what’s been done to your business or what they’re planning to do. Maybe this is done with regular meetings or your partner has a detailed work log.

2. Trust and reliability

When running a business, you want to be sure it’s in good hands. Your partner should be able to handle difficult situations without you worrying if they’ll only make matters worse. Furthermore, if you need some time off, you should be able to trust your partner to handle important matters while you’re away.

3. A team player

Much like communication, your partner should be willing to uphold their role. They should be able to cooperate with you and your employees. It shouldn’t feel like you’re constantly combating and correcting everything your partner does.

4. Business focused

You’ve likely heard the rule to keep home matters at home and business matters at work. In other words, your partner should be able to separate any difficulties they’re experiencing outside of work and focus on the job at hand. If their home life is affecting their work, it’s also affecting your business.

5. Skilled and experienced

The biggest thing that many people look for when starting a partnership is someone who is skilled and experienced. Not only should your partner be skilled and experienced, but they should be able to provide a unique and new take on how to run your business and handle clients and employees. Do you believe you’ve found the right business partner? Then you may need to learn what legal steps to take next. A poorly made partnership agreement could spell trouble for your business.

Bad insurance is also bad for your business

2023-05-02T18:00:13Z

When you purchase a policy from an insurance company, you expect to be protected from certain losses – but this may not always be the case. Despite paying premiums and upholding your end of the bargain, your insurer may fail to come through when needed. Bad faith insurance is a serious concern, and unfortunately, a significant percentage of businesses experience this problem.

You may encounter losses

If your insurance company fails to pay a claim, you may need to dig into your own pocket to cover repairs for anything from broken glass to a burst pipe, which can be expensive – or even disastrous for your business. Another way you may incur losses due to bad faith insurance is when you need to close the business. For instance, when your area experiences a natural disaster that destroys your property, and the insurance denies your claim.

You may suffer health issues

Using the water damage example, bad faith insurance can lead to health issues. If you don't have the costs to repair the damage immediately, you may need to wait. This can lead to mold growth, endangering you, your employees and your clients. Further, when you experience a major issue, such as property damage from a natural disaster, and the insurer refuses to cover the expenses, you may never recover enough financially to reopen, and that can lead to significant mental distress. The insurance industry has questionable systems. For insurers to make more profits, they need to reduce payouts, which can disadvantage policyholders, especially businesses. If you have experienced bad faith insurance, you should get legal help to protect your rights.

Whose side is an insurance company really on?

2023-05-01T12:42:56Z

When it comes to insurance companies, profit is very closely tied to risk. Insurance companies take on a risk with every client and every policy. For example, consider a life insurance policy. The risk is that the person will pass away more quickly than expected, giving the insurance company less time to collect premiums. Or maybe it’s a home insurance policy. The risk is that the home could burn to the ground or suffer significant damage in a storm, and then the company will have to pay out more than they’ve brought in through monthly premiums.

A conflict of interests

In many ways, insurance companies make money at the expense of the consumers who are buying their policies. In other words, an insurance company definitely wants you to think that it is on your side. It wants you to feel as if it is here to help when you need it. But the reality is that the insurance company is simply trying to make as much money as possible. If helping you runs counter to that aim, its employees may be resistant to doing so. For example, maybe you filed an expensive claim and your insurer only agreed to pay out a small percentage. Or perhaps it simply denied your claim entirely, when you know it’s valid. You may start feeling as if the insurance company is attempting not to pay you the way that you believed it would when you bought that policy. Doing so is just too expensive. It’s hoping you will accept a smaller payout or that you won’t keep pursuing one. But you can see how problematic this is from your perspective. You thought that you were buying a service and that the insurance company would be there to cover the costs when you needed it. If it is not there for you, what legal steps do you have to take? It’s important to know about all of your options, especially with so much money on the line.

Why would the insurance company deny your water damage claim?

2023-04-18T16:09:09Z

You’ve probably heard the adage, “Water is life.” But water in the wrong places can cause serious damage. If you insure your home against water damage, you may have peace of mind knowing that in the event of a disaster, the insurance company will come through and provide compensation for the resulting damages.

If disaster strikes, the worst news you want to hear is that the insurance company is not going to approve your claim. If this happens, you might want to explore your legal options, especially if you believe the denial is unjustified. But before figuring out your options, it helps to understand why the insurance company could have denied your claim:

Here are some of the reasons why the insurance company can turn down your claim:

If you fail to file on time

Typically, your insurance contract will indicate the timeframe within which you must bring your claim. That said, per California statute, you have up to three years to file a claim. Additionally, do keep in mind that you will likely need to file a Proof of Loss statement with your insurance company within 60 days from the date of the damage.

The insurance company may decline your claim if you do not file it within the statute of limitations period.

Non-payment of your premiums

Unpaid premiums are one of the main reasons why insurance companies turn down claims. Per your coverage contract, you have a duty to pay your premium on time. If you have any unpaid premiums, be sure to update your account as soon as you can.

Questionable claims

When your home is damaged, you should expect the insurance company to deploy their adjuster to investigate and document your claim. If they find your claim suspicious or questionable, they will definitely launch an investigation whose outcome might lead to the refusal of your claim.

Safeguarding your interests

Water damage can leave you with a huge bill. Learning more about California’s bad faith insurance laws can help you safeguard your rights if you believe the insurance company is unjustifiably denying your water damage claim.

Looking to launch a new business really fast?

2023-04-13T20:33:09Z

The California economy is constantly evolving. The kinds of food that people crave, the clothes that are on trend, the places they want to go to have fun and even the modes of transportation that Californians use to get around seem to shift from season to season. As a result, entrepreneurs and small business owners often benefit from being flexible and ready to capitalize on “the next big thing” whenever that thing announces itself as an opportunity for enterprise. Because of all this, there are times when it pays to get a business model off the ground fast – not just “relatively fast when taking into consideration market conditions, legal obligations, etc.” but “I want a new company up and running by next Tuesday” fast. Under these circumstances, there are business formation structures that you’ll want to consider for a new venture over others.

Start now, transition later

Perhaps you envision that your company will operate in multiple states and possibly even globally. Or perhaps you simply envision a company that is expansive enough that personal liability protection in the event of business challenges could be a real issue for you. As a result, you may want to consider formalizing your business as a corporation or a limited liability company down the road. For now, however, if you just need to get your business moving immediately, you may want to consider forming a sole proprietorship if you’re going to own the company outright. If you’ll share ownership interests with at least one other, then a partnership will get your business up and running very quickly. These company structures take almost no time to form and they can be transitioned to LLCs or corporations once a company is operational and looking to expand or to benefit from greater legal protection. You can seek legal guidance to make this switch at any time.