Court Declares CA FAIR Plan insurance Unlawful
On June 24, 2025, Los Angeles Superior Court Judge Stuart M. Rice issued a summary adjudication ruling against the California FAIR Plan Association (CFPA) in the case of Jay Aliff v. CFPA. The ruling states that the FAIR Plan’s smoke damage coverage language unlawfully narrows homeowner protections and violates California Insurance Code §2071.
The decision carries major consequences for homeowners whose claims were denied based on outdated “visible/smell” standards.
Key Findings
Illegal Policy Limitation
The FAIR Plan’s 2020–2022 policies stated that smoke damage would only be covered if it was “evidenced by permanent physical changes to the property.” The judge ruled this violates the statutory minimum coverage required under Insurance Code §2071.Ambiguity and Deceptive Language
Judge Rice found the policy’s language ambiguous, misleading, and not “conspicuous, plain and clear” as required by law (State Farm v. Jacober). Many policyholders would not understand that non-visible damage would be excluded, contradicting common-sense expectations.Violation of Precedent
The ruling relied on Another Planet Entertainment v. Vigilant Ins. Co. (2023), which held that microscopic smoke particles and airborne contaminants do qualify as direct physical loss, even if not visible.
Implications for Homeowners
This ruling confirms:
Smoke damage does not have to be visible or smellable to trigger coverage
Policies that deny coverage based on this standard are unenforceable
Thousands of wildfire-related smoke claims may now be reopened or appealed
What to Do Now
Review your FAIR Plan policy documents (especially from 2020–2022)
Gather smoke damage test results or cleanup receipts