Homeowners affected by wildfires frustrated over FAIR Plan claims | On Your Side
Published Date: 04/11/2025
When the Smoke Clears: Why California Homeowners Are Losing Faith in the FAIR Plan
California homeowners have endured a relentless barrage of wildfires, each season seeming worse than the last. But for many survivors, the real battle begins after the flames are out. As news stories and firsthand accounts continue to reveal, a growing number of Californians are discovering that the state’s so-called “insurance of last resort,” the California FAIR Plan, is failing to meet its most basic promise — to provide coverage when no one else will.
Recent reports highlight a disturbing trend: homeowners with smoke-damaged properties being denied or underpaid on claims, leaving them unable to safely return to their homes. The frustration, confusion, and financial strain are mounting — and experts say it’s not just an administrative hiccup, but a systemic breakdown in how California’s insurance safety net is functioning.
The Smoke Damage Dilemma
When a home is completely destroyed by fire, the insurance process is relatively clear. The loss is total, the damage is visible, and policyholders typically receive the maximum payout allowed under their policy.
But when a home survives — only to be filled with toxic smoke, ash, and soot — things get complicated. Smoke damage is often invisible, lingering in walls, insulation, HVAC systems, and fabrics. It can cause long-term health issues and property deterioration. And yet, these cases are precisely where insurance disputes are surging.
According to the California Department of Insurance (CDI), the FAIR Plan must cover smoke damage. But many policyholders say their claims are being undervalued or outright denied. One Pacific Palisades homeowner, whose townhome survived the Palisades Fire, reported that FAIR Plan adjusters determined his smoke damage didn’t exceed his $2,500 deductible — despite estimates showing $25,000 or more in necessary cleanup and remediation.
When he questioned this, the FAIR Plan reportedly told him to simply “clean it up” himself using household elbow grease and a few rented air purifiers — an absurd suggestion given that his home tested positive for unsafe levels of lead and lithium in the air and insulation.
A Legal and Regulatory Flashpoint
Smoke damage has been a contentious issue for years, but in 2022, it became a flashpoint for state regulators. Following an investigation into the FAIR Plan’s claim handling practices, the Department of Insurance found widespread noncompliance with California law. The FAIR Plan had failed to properly evaluate and pay out smoke-related claims, forcing regulators to intervene and reopen nearly 60 cases.
The result was clear: the FAIR Plan was told to rewrite its policies and procedures to reflect that smoke damage must be covered as part of fire-related losses.
And yet, two years later, homeowners are still reporting the same denials and underpayments. Insurance expert Karl Susman, who has long tracked the FAIR Plan’s performance, confirmed that the issue remains unresolved. He notes that while the Department of Insurance has made its stance explicit, FAIR Plan administrators appear to be applying their own interpretation of what constitutes damage — a practice regulators have described as a violation of state law.
“They seem to be taking the position that smoke contamination is something you can just clean up,” said Susman. “But we’re talking about toxins, particulates, and hazardous residue that pose real health risks. These aren’t just cosmetic issues.”
A Structural Accountability Problem
Part of the problem lies in the FAIR Plan’s unique legal structure. Despite being created by the state in 1968, the FAIR Plan is not a government agency. It’s a privately managed pool funded by insurance companies that operate in California.
That means it isn’t subject to the same transparency and accountability standards as state departments — yet it plays an essential public role by providing coverage to high-risk homeowners who can’t get insured elsewhere.
State Senator Ben Allen, who has been outspoken about FAIR Plan reform, says this structure makes oversight extremely difficult. “We don’t have the kind of direct control over them that we do with a typical government agency,” Allen explained. “It sounds as though they’re trying to take advantage of that. And that’s unacceptable.”
Without stronger oversight, homeowners have little recourse. Appeals can drag on for months, testing and remediation costs skyrocket, and families are often forced to pay out-of-pocket or live in unsafe conditions while they wait for a resolution.
The Human Cost of Bureaucratic Failure
The emotional and financial toll is staggering.
Homeowners like Blossom Wright, who owns rental units in Pasadena affected by wildfire smoke, say they’ve been told their damage “doesn’t qualify” — except for replacing insulation and HVAC systems. Wright argues that this overlooks the obvious: layers of soot and ash coating the interior surfaces of her home. “This isn’t just dirt,” she said. “It’s contaminated material that requires professional cleanup.”
Experts agree. Studies have shown that post-fire ash and dust can contain carcinogens and heavy metals. Long-term exposure can cause respiratory issues and worsen pre-existing health conditions, particularly for children and the elderly. Yet, FAIR Plan’s guidance to “clean it up yourself” leaves many policyholders at risk.
What Homeowners Can Do
Despite these challenges, experts like Karl Susman emphasize that homeowners are not powerless.
If a claim seems unjustly denied or undervalued, policyholders should:
- Get Independent Testing:
Hire a certified environmental testing company to measure toxin and particulate levels. This documentation can be critical for appeal or legal action. - Consult a Licensed Insurance Agent or Broker:
Agents often understand policy language better than consumers and can help challenge improper interpretations. - Contact the Department of Insurance:
The CDI can intervene in cases of bad faith or noncompliance. Filing a formal complaint adds pressure for enforcement. - Keep Detailed Records:
Every conversation, inspection, and quote should be documented. Evidence is key to proving loss. - Consider Professional Advocacy:
Public adjusters or consumer advocacy groups can assist in negotiating fair settlements, especially for complex claims.
Rebuilding Trust in California’s Safety Net
The FAIR Plan was never meant to be a permanent solution — it was designed as a stopgap for homeowners in high-risk areas until the private market could stabilize. But as wildfires intensify and major insurers withdraw from California, the FAIR Plan has become the only option for hundreds of thousands of policyholders.
The problem is, when that last resort stops functioning properly, the entire system collapses. Homeowners are left uninsured, undercompensated, or caught in bureaucratic limbo.
Regulators and lawmakers are increasingly aware that reform is overdue. Stronger oversight, updated policy language, and independent auditing of claim practices could go a long way toward restoring faith in the program. But until those changes take effect, homeowners will need to stay vigilant, document thoroughly, and advocate fiercely for fair treatment.
Conclusion: When “Fair” Isn’t Fair
California’s FAIR Plan was built on a simple promise — that no homeowner would be left behind in the wake of disaster. But today, as smoke-damaged families struggle to reclaim their homes, that promise is being tested like never before.
From Pacific Palisades to Pasadena, the stories are alarmingly consistent: policyholders fighting not against fire, but against red tape, underpayment, and indifference. As Karl Susman aptly put it, “Consumers have more power than they think. But they need to use it — and they need to use it loudly.”
Until California enforces true accountability within the FAIR Plan, homeowners will continue to find themselves battling both the elements and the institutions that were meant to protect them.
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