FAIR Plan Must Cover All Wildfire Smoke Damage

On June 25, 2025, Los Angeles Superior Court Judge Stuart M. Rice issued a landmark ruling declaring the California FAIR Plan Association must cover smoke damage even when it’s invisible or undetectable by smell. This decision—stemming from litigation originally filed by policyholder Jay Aliff—addresses long-standing insurer practices that have excluded homeowners from smoke-loss recovery.

This ruling dramatically expands the scope of coverage available under wildfire insurance, challenging restrictive contractual language and establishing a new standard across the insurance industry.

Key Legal Findings

1. Expanded Definition of “Direct Physical Loss”
   The ruling rejects FAIR Plan’s restrictive definition requiring visible or olfactory proof of smoke damage. Now, laboratory-confirmed and microscopic contamination must be considered valid claims.

2. Policy Language Falls Below Statutory Minimum
   Judge Rice determined the FAIR Plan provides less coverage than required by California’s Standard Form Fire Insurance Policy, violating Insurance Code §§ 2070–2071.

3. Consumer Expectations Matter
   The court emphasized that policy exclusions must be conspicuous, plain, and clear. The FAIR Plan’s “sight-and-smell” test failed this standard and “limits coverage reasonably expected by an insured.”
   

   Why This Ruling Changes the Game

• Thousands of Prior Claims Affected: With over 550,000 FAIR Plan policies in force, many homeowners denied coverage due to non-visible smoke contamination can now reopen their claims.

• Health Risks and Cleanup Costs Covered: Smoke damage often involves toxins like lead, PAHs, and cyanide—not eliminable by simple cleaning. Professional remediation is now a legitimate, covered claim expense.

• Systemic Reform for Insurers: By compelling FAIR Plan to revise policies and remove unlawful restrictions, the ruling sets a precedent for all California insurers, sharpening their obligations.

Kerley Schaffer LLP’s Role

Kerley Schaffer LLP, led by attorney Dylan Schaffer, has been instrumental in challenging unjust cleanup exclusion clauses for years:

• Represented Jay Aliff and other policyholders in key litigation

• Advocates for enforcement of Insurance Code protections and bad-faith remedies

• Collaborating with regulatory and industry groups to overhaul smoke-damage assessment practices

This ruling is the result of persistent legal strategy and policy advocacy focused on safeguarding homeowners.

What Homeowners Should Do

If your FAIR Plan smoke claim was denied or undervalued due to lack of visible damage or smell:

1. Gather your records: policy documents, denial letters, lab reports, contractor invoices

2. Reopen past claims: cite the June 25 ruling as new legal grounds

3. Consult Kerley Schaffer LLP: assess opportunities for reimbursement or bad‑faith litigation

Conclusion

This ruling is potentially the most important for California wildfire insurance in decades. It marks a clear shift—insurers can no longer deny claims based on outdated visibility tests. Homeowners with smoke damage now have a validated legal pathway to compensation.

If you’ve been affected by wildfire smoke and your claim was denied, contact Kerley Schaffer LLP today for a free evaluation. This could be your chance to recover the rightful cleanup and remediation costs.