Legal Question in Insurance Law in California

If the damage happened within the last six months, your first step is to make a formal demand for compensation to the City Council, with all the contents required by the Tort Claims Act in the California Government Code. The City Council then has 45 days to respond. If they deny the claim, you have six months to file a lawsuit for damages.

If this happened more than six months ago, you must follow the same steps, but also include a request for consideration of a late filed claim.

Although it is aimed at disability rights violations, the process is laid out very clearly on this web page, and the process is the same: http://www.disabilityrightsca.org/pubs/522901.pdf

Lastly, however, I should warn you that it sounds like the City and their insurance carrier are correct that the City is not liable. In order for the government to be liable for a dangerous condition on public property, the government must have either actively created the hazardous condition or have notice of it and fail to take reasonably necessary steps either to correct it, or to otherwise protect the public (such as by fencing or coning off the danger). A city cannot create a dangerous condition by neglect. If public works had DUG the hole and left it open and unmarked, that would be "creating" the hazard. A condition caused by neglect falls into the second category. If their neglect results in a dangerous condition, such as a sink hole, someone has to notify them that the neglect has created the condition before they can be held liable.