Legal Question in Business Law in California

No. Farmers didn't damage your property, and Farmers has no contract with you. It has a contract with your former neighbor that may require it to help her if you sue her. But she is still the one you must sue.

You cannot sue your neighbor's carrier. You can hire an investigator to find her to serve her or find another way to track her down. Or you can make a claim on your insurance and then your carrier can negotiate with her carrier.

Both the previous answers are correct. The California Supreme Court ruled several decades ago that third parties cannot ever sue casualty and indemnity insurance companies. The insurance companies have obligations to defend or pay claims that their insureds would otherwise have to defend or pay. Until you find her and sue her, they have no obligation to anyone. You are, however, correct that the insurance company made the wrong call. There are a number of cases that hold that no matter how careful you are with water heaters and plumbing, if your water system fails and damages a neighbor, you are liable and therefore your insurance must pay if you have coverage.

I agree with Mr. McCormick. At one time you could sue a third party's insurance carrier, in what was known as a "Royal Globe" action. The California Supreme Court put an end to that practice in Moradi-Shalal v. Fireman's Fund Ins. Companies (1988) 46 Cal.3d 287. You could only sue the insurance company for someone else if the person who owned the policy assigned the right to sue to you.