By Anna Phillips, WASHINGTON POST
Armed with an industrial hygienist’s report showing that the fires that blazed through Los Angeles last month had filled his home with toxic ash and soot, Damian Horan filed a claim with his insurance company and waited for help.
He had paid for smoke damage coverage as part of his policy with the California FAIR Plan, the state’s insurer of last resort. Every part of his surviving Pacific Palisades home that had been tested, from the attic to the heating and air conditioning system, had turned up positive for hazardous smoke residue. But when the FAIR Plan sent him a letter in early February, it said it would only cover “permanent physical changes” from smoke — an adjuster told him that meant damages visible or detectable by smell, not the cost of testing or removing the chemicals and microscopic particles left by the fire.
“This is the most stressful thing I’ve ever gone through in my life,” said Horan, who has two young children and is battling cancer. “You think you have insurance that will make things easy, and now it’s just a full-time job battling to try to keep your family safe.”
Since the Palisades and Eaton fires destroyed more than 12,000 structures in Los Angeles, some residents whose houses did not burn down have learned that the FAIR Plan policies they bought may not cover the cost of removing all of the toxic chemicals, ash and soot that urban wildfires leave behind. Like Horan, many of these policyholders turned to the plan after they could not buy insurance on the private market, which deemed their fire risk too great.
Now, as they struggle to recover from two of the most destructive wildfires in California history, some are facing tens of thousands of dollars in costs for deep-cleaning and remediation to remove lingering contaminants. The fires spread this fine layer of hazardous material throughout dense neighborhoods, coating homes in the toxic remains of burned buildings, cars, electronics, plastics and household chemicals. Researchers say these substances can create health hazards that remain for months.
In Pacific Palisades, where the number of homes enrolled in the FAIR Plan nearly doubled between 2023 and 2024, many policyholders are still wading through the claims process. Several residents said they already expect to take the plan to court to cover their financial losses. Some fire evacuees have taken to calling the insurer the “UNFAIR Plan.”
In an email, Hilary McLean, a spokesperson for the FAIR Plan, said it expects its adjusters to make recommendations based on what they see at people’s homes and in accordance with state law.
“While the FAIR Plan is not intended to, and does not, afford coverage for nonpermanent damage, we do not deny claims for smoke damage,” McLean said.
Clashes over covering smoke damage have become a growing issue in states that have endured devastating fires in recent years — including California, Colorado and Hawaii, said Amy Bach, executive director of United Policyholders, a public interest advocacy group. As climate-fueled disasters have increased, home insurance companies have responded by looking for ways to limit their financial risks. Some major carriers have fled wildfire-prone areas. A 2022 report by the nonprofit Consumer Watchdog found that others were adding new limits to their coverage and restricting investigations into the scope of fire damage.
“It’s a huge, high stakes fight,” Bach said, fueled by the absence of industry standards and state laws regulating how smoke-damaged homes should be tested and cleaned.
California law requires insurance companies to compensate property owners for “all loss by fire.” Requiring homeowners to prove permanent physical changes before insurance will pay for smoke damage is an “artificial limitation,” Bach said, adding, “In no way does that pass muster.”
The FAIR Plan, which operates as an insurance pool run by the state’s largest private carriers, rejects this interpretation of the law. McLean said it follows all laws related to insurance claims handling and declined to comment on individual claims.
“We understand the Palisades and Eaton fires have been challenging and highly disruptive for affected communities,” she said.
California regulators and the FAIR Plan said they did not have data on the number of smoke damage claims filed in the aftermath of the L.A. fires. In its request to state regulators for a $1 billion bailout to pay fire claims, the plan said it had received more than 4,500 claims by early February. About 45 percent were for partial losses, which could include smoke damage and fine particle contamination.
State regulators have known about the plan’s limits on smoke coverage for years.
In January 2021, the California Department of Insurance wrote a letter to the FAIR Plan saying its fire insurance policy failed to provide “the mandatory minimum coverage required by California law.”
The department followed it with an investigation into the FAIR Plan’s handling of wildfire claims, concluding that its approach to smoke damage violated the law. The regulator accused the program of essentially tricking state officials into approving a narrower definition of smoke damage in 2017, saying that the FAIR Plan had “omitted relevant facts and misrepresented revised language” that made it seem as though it was actually broadening its coverage.
Since then, policyholder advocates said California Insurance Commissioner Ricardo Lara has not forced the issue. A spokesperson for Lara said that, as a result of the study, the FAIR Plan agreed to instruct its claims adjusters to process smoke damage claims “in line with the Department’s position.”
McLean, the FAIR plan’s spokesperson, said it “has not altered its policy form or the way it determines coverage for smoke damage claims as a result of the market conduct exam.”
Carmen Balber, executive director of the Consumer Watchdog, said the state needs to take more decisive action.
“The record is clear here,” Balber said. “FAIR has been lowballing consumers on smoke claims. The department found their actions were illegal. And the department needs to hold FAIR’s feet to the fire.”
A class-action lawsuit filed last year on behalf of more than 365,000 FAIR Plan policyholders accused the program of unlawfully selling policies with subpar smoke-damage coverage. The lawsuit said the plan had put residents at risk of exposure to contaminants that may not be visible to the human eye. A ruling on whether the plan’s smoke policy is legal could come as soon as this June, in a separate case pending in Los Angeles County.
“Here we are in 2025, you’ve got thousands of people in Los Angeles asking the same question: Is FAIR Plan going to pay to fix my house? The answer is no,” said Dylan Schaffer, the attorney for the plaintiffs in both cases. “They’re going to tell you to go clean your own house.”
Some residents whose homes were damaged last month have done that and moved back. Some said they had mopped and scrubbed only to evacuate a second time after experiencing headaches and difficulty breathing. Others said their homes are unbearable and do not plan to return until all of the contaminants have been removed.
Tim McCune, a FAIR Plan policyholder in Pacific Palisades, said the plan is failing to fulfill its obligations to residents who paid thousands of dollars in annual premiums.
After the fire, McCune had industrial hygienists assess his home and the findings were unambiguous: high levels of fire-related particulates, including soot, char, ash and other substances were present. The testing company suggested he hire a fire restoration contractor to remove the attic insulation, power wash the house’s exterior and clean all of the surfaces — everything from walls and floors to inside cabinet drawers. The lowest estimate McCune got for this work came in at $130,000. The FAIR Plan disagreed that such a level of cleaning was needed and sent him a check for $46,000, he said.
“You wind up trapped in this back-and-forth in which they won’t accept the environmental testing report showing this stuff is toxic and needs to be completely removed,” McCune said.
Some residents with intact homes may have no choice but to return home soon.
Horan said the FAIR Plan gave him 90 days of living expenses and denied his requests to extend it. Other policyholders were offered only 30 days. With the time he has left, Horan said he is working to line up a remediation company to scour his home, unsure whether he will ever be reimbursed.
“It just seems absolutely crazy to me because there are toxins in the house,” Horan said. “If they don’t get cleaned, I don’t know why we have smoke damage coverage in the first place.”