California FAIR Plan Fire Policy Unlawful
A Landmark Victory for California Policyholders
In a major ruling that impacts thousands of wildfire victims across the state, Los Angeles Superior Court Judge Stuart M. Rice found that the California FAIR Plan Association’s fire insurance policy fails to meet state-mandated coverage requirements. The June 25, 2025 decision declares that the policy’s definition of "direct physical loss" and its treatment of smoke damage are unlawfully restrictive, violating California Insurance Code §2071.
The case—Jay Aliff v. California FAIR Plan Association—was led in part by Kerley Schaffer LLP, which has been litigating this issue for years.
“This win was years in the making,” said Dylan Schaffer of Kerley Schaffer LLP. “We look forward to taking this victory to FAIR Plan’s doorstep for the thousands of Angelinos we believe are being hurt by these illegal policies.”
What the Court Decided
1. The FAIR Plan Provides Less Than Required by Law
The court held that the FAIR Plan’s policy failed to match the Standard Form Fire Insurance Policy required under Section 2071. That law guarantees coverage for “loss by fire,” not just visible or permanent damage.
Judge Rice cited an April 2017 FAIR Plan statement acknowledging that its own revisions would reduce claim payouts compared to earlier policy versions—a key admission that helped shape the decision.
2. “Sight and Smell” Standard is Illegal
The FAIR Plan required that smoke damage must be seen by the naked eye or smelled by an average person to be covered. The court struck this down, ruling that limiting coverage in this way is both inconsistent with the standard form and illegal under California law.
“Direct physical damage … need not be visible to the naked eye,” the court wrote, echoing the California Supreme Court’s 2024 ruling in Another Planet Entertainment LLC v. Vigilant Insurance Co.
3. Smoke Dispute Procedures Also Flawed
The court also took issue with the FAIR Plan’s smoke damage dispute resolution process, ruling it unlawful insofar as it relied on the now-invalidated visibility and scent criteria.
Why This Matters
This case is far more than a win for a single homeowner. It’s a seismic shift in how fire insurance is interpreted across California, especially for those who rely on the FAIR Plan—the state’s “insurer of last resort.”
✅ Now Covered
Lab-confirmed smoke contamination, even when invisible
Wildfire smoke residue embedded in walls, insulation, and HVAC
Claims previously denied due to "lack of visible damage"
❌ No Longer Allowed
Denying claims unless smoke is seen or smelled
Using outdated or confusing language to limit payouts
Failing to match the benefits of California’s standard fire policy
Policyholder Action Steps
If you were insured by the FAIR Plan and experienced smoke or fire damage in the last few years, especially if you were denied coverage:
Review Your Policy
Check whether your claim was affected by the unlawful “sight-and-smell” rule or limited definitions of “direct physical loss.”Gather Your Documentation
Collect any lab test results, cleanup invoices, photos, and communication records from past claims.Request a Free Legal Review
Kerley Schaffer LLP is currently reviewing wildfire damage claims denied by the FAIR Plan. You may be eligible to reopen your claim or pursue legal action.
👩⚖️ About the Legal Team
Plaintiff Jay Aliff was represented by a coalition of attorneys including:
Edward Kerley and Dylan Schaffer of Kerley Schaffer LLP
David Mindell and Ali Moghaddas of Edelson PC
The FAIR Plan was represented by Nicholas J. Boos of Maynard Nexsen.
The case: Aliff v. California FAIR Plan Association, Case No. 21STCV20095, Los Angeles Superior Court.
Legal Support Is Just One Call Away
This ruling sets a powerful precedent that could impact tens of thousands of homeowners across California. If you or someone you know paid out-of-pocket for smoke remediation or was denied a claim based on limited policy language, you may now have legal standing to fight back.
Contact Kerley Schaffer LLP for a free consultation and let our experienced attorneys help you reclaim what your policy truly promised.