California Governor Signs Act to Create Smoke Damage Presumption

California Gov. Gavin Newsom on Tuesday signed legislation establishing standards for investigating, testing and restoring smoke-damaged homes.

Newsom signed Assembly Bill 1795, the Smoke Damage Recovery Act. The bill, authored by Assemblymember Mike Gipson and sponsored by California Insurance Commissioner Ricardo Lara, creates a presumption that smoke damage within a wildfire impact area resulted from the wildfire.

It also requires insurers to pay for necessary testing and sampling, and it prohibits insurers from terminating Additional Living Expense benefits until homes are restored and safe to occupy.

Other mandates include:

• Establishing timelines for inspections and claim handling.
• Requiring repair estimates that restore homes to their pre-loss condition while meeting health and safety standards.
• Preserving a policyholder rights to choose restoration contractors.
• Establishing training requirements for adjusters handling smoke damage claims.
• Protecting workers performing restoration and remediation activities.

AB 1795 directs the California Department of Insurance and CalOES to evaluate challenges posed by smoke damage and develop recommendations to strengthen protections for property insurance consumers and communities affected by future contamination events.

The American Property Casualty Insurance Association said the new law represents “a meaningful step toward clearer guidance on smoke damage claims,” but as regulations are developed around the changes, the must be “grounded in credible science, valid methodologies, and the best available technical expertise.”

“APCIA remains committed to working in good faith with policymakers, regulators, consumers, and scientific experts to support standards that protect consumers, improve transparency and understanding, and help maintain affordable and available insurance coverage for Californians,” a statant from the association reads.

The legislation grew out of efforts led by the CDI, wildfire survivors, consumer advocates, public health experts, and legislators, to address what they call a consumer protection gap.

Smoke damage became a point of contention following the L.A. wildfires in June. Smoke damage claims have emerged as a point of contention between some carriers and consumers. Following the L.A. fires, Lara created the Smoke Claims and Remediation Task Force, which found wildfire victims were falling through the gaps in smoke damage inspection, testing and restoration rules.

It also responds to challenges from by the Lineage Logistics warehouse fire in Boyle Heights in June, where prolonged smoke impacts raised questions about insurance coverage. The 491,000-square-foot building is a cold storage warehouse blaze sent large plumes of dark smoke into the air in the Boyle Heights and surrounding areas.

Topics California