California FAIR Plan Faces Mounting Pressure Over Smoke Damage claim Denials
LOS ANGELES – California’s FAIR Plan,the state’s insurer of last resort,is under increasing scrutiny and legal challenge for its handling of smoke damage claims following devastating wildfires. Fire survivors and the California Department of Insurance (CDI) allege the plan has been illegally denying claims based on a restrictive policy interpretation requiring “permanent physical changes” caused by smoke.
The CDI filed a lawsuit against the FAIR Plan in July, asserting violations of state law. This action followed a June ruling by a Los Angeles Superior Court judge that deemed the insurer’s smoke claim practices illegal. The FAIR Plan has stated it does not intend to appeal the court’s decision.Since January, the CDI has received at least 220 complaints related to smoke damage or related issues against the FAIR Plan. Survivors argue the policy language, specifically the “permanent physical changes” requirement, has caused unneeded hardship.
“Since the illegal policy change in 2017, thousands of fire survivors across California have suffered needlessly,” stated a report from the Eaton Fire Survivors Network.
the FAIR Plan acknowledged the concerns, stating they have been “working collaboratively with the California Department of Insurance to update and clarify our policy language around smoke damage.” However, fire survivors are demanding more decisive action, urging Insurance Commissioner Ricardo Lara to order the complete removal of the “physical damage” requirement.
beyond claim denials, survivors are calling for greater transparency from insurers and the CDI. they are requesting insurers provide policyholders with copies of original and revised loss estimates, and are asking the CDI to publish monthly reports detailing complaints against insurers, alongside a public portal for tracking complaint status.
A recent survey by the association Department of Angels revealed the extent of the challenges faced by fire victims, finding that only 25% of those who lost homes or sustained severe damage in the Eaton and palisades fires had their claims fully approved.Victoria Knapp, president of the Altadena Town Council, highlighted the difficulties in navigating the claims process, stating she is currently working with her fifth insurance claims adjuster. “Survivors cannot rebuild when the vrey safety net that we’ve paid into refuses to function,” Knapp said.
The CDI responded to the demands, citing its recent legal action and a letter sent to the FAIR Plan demanding policy amendments. The situation remains fluid as fire survivors continue to advocate for fair and timely claim resolutions.
