Wildfires are an unfortunate reality in California, and the recent Los Angeles wildfires have left behind more than just charred landscapes—they’ve also caused significant smoke damage to homes and businesses. If you’re a property owner dealing with lingering smoke odors, stained walls, or even hidden toxic particles, understanding your insurance rights is critical.
A new California Insurance Bulletin (2025-7) clarifies how insurance companies should handle smoke claims, ensuring policyholders receive fair treatment. Here’s what policyholders suffering from smoke, soot and ash damage need to know.
Smoke Damage IS Covered – Your Policy Says So
Some insurance companies have argued that smoke damage isn’t covered unless there’s “visible destruction,” relying on a recent case decided on poor facts. However, the Bulletin points out that California’s Supreme Court held in Another Planet Entertainment v. Vigilant Insurance 1 that smoke damage can be covered if “direct physical loss or damage” is demonstrated by the facts.
The key takeaway is that “smoke” is a named peril in the policy. Smoke claims are covered by property insurance policies if the presence is demonstrated.
Insurance Companies MUST Investigate Smoke Claims Properly
If a smoke claim is filed due to the Los Angeles wildfires, your insurer cannot deny it without a fair investigation. The California Department of Insurance has made it clear:
The Department expects insurers handling smoke damage claims to comply with California Insurance Code provisions that govern claims settlement practices, including without limitation California Insurance Code section 790.03(h), and all other applicable laws and regulations. In particular, insurers must adopt and implement reasonable standards for processing smoke damage claims. Also, an insurer must make good faith efforts to effectuate prompt, fair, and equitable settlements of smoke damage claims where liability is reasonably clear. Further, section 2695.7(d) of the Fair Claims Settlement Practices Regulations5 requires every insurer to conduct and diligently pursue a thorough, fair, and objective investigation of a claim.
According to the Los Angeles County Department of Public Health, fire debris and ash from wildfires may contain asbestos, heavy metals, chemicals, and other hazardous substances. Fire debris and ash also pose significant threats to public health through inhalation of dust particles and contamination of drinking water. The improper handling of fire debris and ash can expose residents to toxic materials and can spread hazardous substances throughout the community.
Evidence that smoke has caused such damage to a policyholder’s property must be fully and fairly investigated. When a policyholder makes a claim for smoke damage, the insurer is required to act reasonably and promptly, and to adopt and implement reasonable standards for the prompt investigation and processing of the claim. It is not reasonable to deny a smoke damage claim without conducting an appropriate investigation, nor is it reasonable for the insurer to require the insured to incur substantial costs to investigate their own claim. If professional testing is warranted for a specific claim, the Department expects the insurance company to contract and pay for these services. The Department has found that there are a number of low-cost, commercially available at-home test kits for asbestos and other smoke damage contaminants, and encourages insurers to consider the distribution of such kits to insureds as a reasonable first step in responding to and investigating certain smoke damage claims where professional testing may not be initially warranted. Depending on the results of such at-home test kits, additional investigation and processing may of course be warranted.
This means that if your insurer is asking you to jump through unnecessary hoops and not investigating your smoke claim properly, you may have grounds to challenge their decision. Indeed, an improper investigation is against the law, and the insurance commissioner warns insurers of this through this Bulletin.
Smoke Damage is More Than Just Odor—It Is Dangerous
As stated above, the Los Angeles County Department of Public Health warns that wildfire smoke contains asbestos, heavy metals, and toxic chemicals. We warned policyholders about this in Are We Valuing Fire Losses Accurately and Keeping Up with the Science of Fire Loss:
The point is that property insurance adjusters evaluating the cost of fire losses need to include independent testing by qualified experts before and after the restoration. This is for the safety of the restoration workers as well as policyholders and others who will be occupying these fire loss structures after the remediation. Smell tests are obsolete. The expected costs of hygienists and toxicologists need to be accounted for in a fire-damaged structure.
These contaminants can linger in carpets, furniture, and HVAC systems, posing serious health risks. That’s why proper testing and remediation are essential.
If Your Home is Uninhabitable, You May Get Additional Living Expenses (ALE)
If smoke damage makes your home unsafe to live in, you may be entitled to coverage for temporary housing. The California Insurance Commissioner has emphasized that insurers must provide fair compensation for ALE when homes are uninhabitable due to wildfire damage. We discussed this in greater detail in California Smoke Soot and Ash Claims—A Cause for Concern.
What to Do If Your Smoke Claim is Denied
If your insurer denies or delays your claim, the bulletin suggests calling the California Department of Insurance at (800) 927‐4357. You can also file a complaint online at www.insurance.ca.gov.
When your smoke claim is denied, it is also our opinion that this is the time to consider consulting with and obtaining advice from California-licensed attorneys familiar with these types of claims. Homeowners and business owners don’t have to accept an unfair denial—California law is on your side.
Thought For The Day
“Strength does not come from physical capacity. It comes from an indomitable will.”
—Mahatma Gandhi
1 Another Planet Entertainment, LLC v. Vigilant Ins. Co., 15 Cal.5th 1106 (Cal. 2024).
