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22h ago

California Regulator Demands FAIR Plan Justify Smoke Damage Coverage

Commissioner Lara’s order forces the FAIR Plan to defend its limited smoke coverage in a hearing set for mid-August.

In this aerial view taken from a helicopter, a stucco villa owned by David Steiner is still standing among burned homes during the Palisades fire in Malibu, Los Angeles County, California, on January 9, 2025.
Smoke and flames from the Palisades Fire form the backdrop to homes in Santa Monica, as seen on Jan. 7. 
Insurance Commissioner Ricardo Lara, seen here in February, announced legal action against the FAIR Plan over smoke damage claim denials.

Overview

  • Ricardo Lara filed an order to show cause against the FAIR Plan on August 1, marking the first enforcement action since a 2022 market conduct exam identified coverage deficiencies.
  • The order contends that the FAIR Plan’s requirement of “permanent physical damage” has enabled arbitrary denials of smoke damage claims after the Palisades and Eaton fires.
  • As the insurer of last resort for homeowners shut out of the private market, the FAIR Plan provides minimal fire and smoke protection that often leaves policyholders undercompensated.
  • The FAIR Plan must respond at a mid-August hearing or face cease-and-desist orders and potential monetary penalties based on the Department of Insurance’s findings.
  • Consumer groups and fire survivors say the three-year enforcement gap allowed thousands to suffer uncompensated smoke damage, urging immediate policy and remediation reforms.