Fair Plan says new policy language, claim reviews will address smoke-damage disputes

Fair Plan leadership told the Assembly Insurance Committee they have updated their policy language on smoke damage and are reviewing previously closed claims in light of litigation and Department of Insurance guidance.

Victoria Roach said the Plan’s policy requires a direct physical loss for coverage. Roach said the department recently approved new policy language that removes a discarded “sight and smell” test the courts had rejected; she said the Plan had already modified claims-handling practices and the updated form aligns the paperwork with those practices.

Roach described the practical distinction between cleaning and covered damage: routine cleaning (for example wiping ash from window sills) is not covered, but deodorization that fails and replacement of permanently damaged items (e.g., rugs), specialized cleaning (for example of piano internals), air-duct professional cleaning where contamination is present, structural repairs (for stucco damaged beyond cleaning), and electronics damaged by smoke are covered when resulting from a direct physical loss.

She said the Plan has paid roughly $3.5 billion in claims from the Eden and Palisades fires and that most claims are closed, though some have been reopened for rebuilds, new contractor estimates, or because claimants presented new evidence. Roach said reopenings are being handled on a case-by-case basis and that the Plan has sent hygienists and independent adjusters to produce recommendations.

Assemblymember Solomon and others asked whether closed smoke claims would be systematically reassessed; Roach said the Plan has reviewed closed claims for legal compliance and is evaluating reopenings individually rather than applying an automatic blanket reassessment.