In a landmark decision with statewide implications, a California judge has ruled that the California FAIR Plan Association violated state insurance law in how it handled smoke damage claims from the January wildfires.
For thousands of homeowners caught in disputes over denied or underpaid claims, this ruling represents more than a legal technicality — it's a long-awaited validation that the FAIR Plan must play by the same rules as every other insurer.
Insurance expert Karl Susman, who has followed the issue closely and assisted many affected homeowners, called the decision "a huge win for fire survivors and for fairness in the marketplace."
"Now they don't just have the Department of Insurance behind them," Susman said. "They have the power of the law. Anyone with a smoke damage claim — new, old, open, or pending — should reach out to the FAIR Plan again and have them reevaluate based on this ruling."
The California FAIR Plan isn't a traditional insurance company. It's a state-mandated, privately managed insurance pool created in 1968 to ensure that homeowners in high-risk areas — particularly those vulnerable to wildfire — could still obtain basic fire insurance coverage when traditional insurers refuse to write policies.
In recent years, as wildfire risk and reinsurance costs have soared, the FAIR Plan has ballooned from a niche safety net into a last resort for hundreds of thousands of Californians who can no longer find coverage in the standard market.
But unlike private insurers, the FAIR Plan offers limited coverage — fire and smoke damage, primarily — and its claims-handling practices have increasingly come under scrutiny.
This latest court ruling directly challenges one of its most controversial practices.
The case centered on how the FAIR Plan interpreted smoke damage in property claims following the Eaton and Palisades wildfires.
Homeowners complained that the FAIR Plan denied or underpaid claims unless the smoke damage could be proven to have caused a permanent, physical, and visible change to their property — and that change had to be detectable without laboratory testing.
That standard, the judge ruled, is not what California law requires.
By imposing those restrictions, the FAIR Plan effectively provided less coverage than m ...
