Los Angeles Times: Ten Victims of January Fires Sue California FAIR Plan Over Smoke Damage

In the wake of the devastating January 7 fires, ten FAIR Plan “still standing” insureds have taken legal action against to enforce their rights.

Although Kathleen Jordan family’s Altadena home survived, the lingering effects of smoke and soot have made it uninhabitable. Frustrated by the FAIR Plan’s lack of communication and failure to investigate their claims properly, the family now finds themselves embroiled in a complex legal battle.

A Growing Crisis

The lawsuit marks the first mass tort case related to the January fires, accusing the FAIR Plan of insurance bad faith and breach of contract. It highlights the insurer's refusal to pay for necessary cleanups and investigations, despite the hazardous conditions caused by wildfire smoke. Jordan expressed the ongoing struggle of trying to communicate with the FAIR Plan, stating, “It’s a full-time job, chasing them down.”

The lawsuit also names ten major California home insurers, including Mercury, Farmers, AAA, and State Farm, which operate alongside the FAIR Plan to provide coverage for property owners unable to secure insurance from standard carriers. Attorney J. Eli Wade-Scott of Edelson PC, which has partnered with Kerley Schafferto represent potentially hundreds of FAIR Plan insureds, emphasized the growing number of complaints from policyholders facing denials and underpayments for smoke damage.

Legal and Regulatory Challenges

The new lawsuit reveals systematic issues within the FAIR Plan, alleging that the insurer has inserted illegal coverage restrictions in its policies since 2016. These changes redefined “direct physical loss,” resulting in unjust denial of claims related to wildfire smoke damage. Despite warnings from the California Department of Insurance in 2021 regarding the legality of these practices, the FAIR Plan allegedly ignored these directives, leading to a regulatory examination that identified 418 violations of the California Insurance Code.

The implications are significant as the FAIR Plan has seen a massive increase in policyholders amid the growing wildfire threat, yet struggles to manage claims effectively.

Financial Fallout and State Response

As the FAIR Plan grapples with an estimated $4 billion in losses due to the January fires, the California Department of Insurance has taken steps to address these issues. Recent bulletins remind insurers, particularly the FAIR Plan, to handle smoke damage claims in line with legal standards and best practices.

With ongoing lawsuits across the state—spanning previous incidents like the 2018 Camp Fire and more recent fires—the growing dissatisfaction among homeowners highlights crucial questions about the efficacy of the FAIR Plan as an insurance safety net.

Conclusion

The lawsuit against the California FAIR Plan by Kerley Schaffer sheds light on significant shortcomings in how wildfire-related claims are handled. As policyholders navigate the complexities of dealing with smoke damage and inadequate support, it becomes increasingly clear that reforms are necessary to ensure fair treatment for all affected families.

For a deeper understanding of the challenges faced by victims of the January 7 fires and the implications of their lawsuit against the California FAIR Plan, read the full article. Stay informed about your rights as a policyholder and learn more about the ongoing legal battles surrounding wildfire damage claims.

California FAIR Plan, Smoke Damage, Wildfire Claims, Insurance Bad Faith, California Insurance, January Fires, Policyholder Rights, Legal Action, Fire Insurance, Home Insurance