California is on the verge of doing something no state has done before: establishing a comprehensive legal framework to determine whether a wildfire smoke-damaged home is actually safe and requiring insurance companies to adjust covered claims consistent with those standards. Assembly Bill 1795, the Smoke Damage Recovery Act, and its companion, Assembly Bill 1642, have passed the California Legislature and are headed to Governor Gavin Newsom. Technically, they are not yet law. But if signed, the two bills could fundamentally change how wildfire smoke claims involving standing homes are adjusted.

One of the problems with wildfire smoke claims has been the absence of accepted standards. What contaminants should be tested for? How much contamination is too much? What constitutes adequate remediation? When is a home actually safe for a family to occupy again?

Those are not academic questions when your children are sleeping in the house. Yet, policyholders, insurers, industrial hygienists, restoration contractors and competing experts have often been left arguing these issues one claim at a time. California Insurance Commissioner Ricardo Lara’s Smoke Claims and Remediation Task Force concluded that statewide standards were needed. Amy Bach, Executive Director of United Policyholders, served on that task force and helped bring the policyholder perspective directly into those discussions.

United Policyholders deserves significant credit for supporting this pro-policyholder legislation. UP has been working on wildfire recovery issues for decades and has specifically fought the battle over proper investigation and remediation of standing homes following wildfires. Bach said after passage of the two bills that United Policyholders had been fighting for more than a decade to get insurers to routinely test wildfire-damaged homes rather than telling homeowners their homes were safe without adequate testing.

AB 1795 attacks the insurance side of the problem. AB 1642 attacks the scientific and public health side. They are designed to work together.

One of the most important provisions of AB 1795 is a rebuttable presumption concerning causation. When wildfire smoke, ash, soot, char, or related combustion products are found in a residential property within the defined wildfire impact zone, the legislation establishes a presumption that the contamination is attributable to the wildfire.

I can appreciate that may sound like lawyer language, but it can have enormous practical consequences. Following virtually every major wildfire, I see policyholders forced to prove the obvious. Their homes smelled fine before the fire. A massive wildfire occurred. Smoke and ash entered the house. Testing afterward reveals wildfire-related contaminants. Yet, enormous amounts of time and money are spent debating whether the contamination really came from the wildfire. A rebuttable presumption changes where that fight begins.

The legislation also addresses additional living expenses. One of the cruelest disputes following a wildfire occurs when an insurer tells a family that their ALE benefits are ending because the house is supposedly habitable while the family remains concerned about contamination. AB 1795 establishes protections intended to prevent insurers from terminating qualifying ALE coverage until the home has been restored to its pre-loss condition and cleared for human occupancy, subject, of course, to the applicable insurance policy provisions and limits.  The concept of restoration to pre-loss condition is important.

The insurance obligation should not be satisfied merely because soot is no longer visible or somebody ran a cloth across a countertop. Wildfire smoke can carry complex contaminants into attics, HVAC systems, wall cavities, furnishings, and other portions of a building. Whether a home is safe cannot always be determined by looking at it or smelling the air.

AB 1642 is intended to provide the scientific backbone for answering the safety question. California agencies will develop standards and guidance addressing testing, measurement, contamination thresholds, remediation, and restoration. The California Air Resources Board will also have a role regarding indoor-air contaminants. The ultimate objective is to move these disputes away from competing claims opinions and toward scientifically established health and safety criteria.

Testing is another major issue. Policyholders should not have to finance sophisticated environmental investigations simply to demonstrate that their covered property remains contaminated. The new framework recognizes that appropriate sampling and testing are part of determining what must be done to return property to a safe pre-loss condition.

AB 1795 also contains claims handling requirements designed to move these claims more quickly. The legislation addresses inspections, payment timing, professional training, and restoration practices. It further recognizes an important principle: policyholders should retain the ability to select the contractors and restoration professionals who will perform work on their homes.

There is another reason these bills matter far beyond California. Wildfire smoke does not respect state lines. Colorado, Oregon, Washington, New Mexico, and numerous other states increasingly face the same questions California is confronting today. After a wildfire, thousands of structures may remain standing even though smoke and combustion products have infiltrated them. California may therefore be creating a template that other states will study.

The legislation is not perfect. One issue worth watching carefully is the geographic definition of the wildfire impact zone. Smoke travels wherever wind and atmospheric conditions take it, not wherever legislators draw a line on a map. A standing home miles from the flames may suffer significant contamination even though it falls outside a statutory boundary.

The standards will also take time to develop, and arguments will undoubtedly arise about testing methodology, contaminant thresholds, causation, and what constitutes adequate remediation. Legislation rarely makes insurance disputes disappear. But these bills represent an important change in direction.

The question after a wildfire should never be whether an insurance company can find somebody willing to say that a home is “good enough” to move back into. The question should be whether the home has been properly investigated, cleaned, restored, and demonstrated through reliable science to be safe.

United Policyholders, Eaton Fire Residents United, wildfire survivors, scientists, public-health professionals, Assemblymembers Mike Gipson and John Harabedian, Commissioner Ricardo Lara, and many others spent considerable time pushing these measures through the legislative process. Commissioner Lara specifically credited United Policyholders and Eaton Fire Residents United with championing stronger protections for wildfire survivors. Bravo!

Amy Bach and United Policyholders deserve special recognition from the policyholder community. This type of consumer advocacy is not glamorous. It involves years of meetings, hearings, task forces, negotiations over statutory language, and fighting over details that most people will never notice until their own home is filled with wildfire smoke.

California has taken an important step toward answering a deceptively simple question: following a wildfire, “is my home really safe to live in?”  Insurance companies should want the answer to that question to be based on science as well.

Thought For The Day

“People who paid for insurance protection, then had their homes contaminated by wildfire smoke and debris, deserve to have their homes restored to pre-loss condition.”
—Amy Bach, Executive Director, United Policyholders