A growing number of California homeowners are finding themselves in a protracted battle with their insurance providers over smoke damage claims, with some families effectively left homeless for over a year and a half. Insurers are issuing ultimatums, demanding residents return to their smoke-affected homes or risk losing temporary housing benefits, a choice many are unwilling to make due to concerns for their children's safety.
The issue is highlighted by homeowners in the Palisades and Eaton fire burn zones, who are still unable to return to their residences nearly 18 months after fires, primarily due to lingering smoke contamination. Elissa Ashwood, a Pacific Palisades homeowner, expressed frustration that her home has not been fully repaired for occupancy, impacting holiday celebrations.
Ashwood's home survived the Palisades Fire, but she claims the damage is extensive. She has been in dispute with the California FAIR Plan, her insurer, over the habitability and extent of the damage. While a claims examiner deemed the main dwelling habitable, a subsequent assessment ordered by Ashwood found significant thermal, non-thermal, and chemical contamination. Ashwood believes the home requires a complete rebuild down to the studs, a cost she says the FAIR Plan is not covering.
In Pasadena, homeowner Frank Lombardi is engaged in a similar dispute with State Farm following the Eaton Fire. Lombardi has filed a lawsuit alleging wrongful denial and underpayment of his smoke damage claim. He stated that his family, with three children, cannot take risks and that their policy should cover complete remediation, which he defines as stripping the house to the studs. State Farm has responded that it reviews claims based on policy terms and the facts of the loss, working with customers to provide all available benefits. The Lombardi home has been uninhabitable since January 7, 2025.
The California FAIR Plan stated it evaluates each claim on its merits and covers all approved claims up to policy limits, including those for smoke damage.
Attorney Dylan Schaffer, representing homeowners in cases against both insurers, noted that companies often challenge claims for homes that appear structurally sound from the outside, as opposed to those completely destroyed. This strategy, he suggests, allows insurers to save money on claims where the damage is not immediately obvious.
The California Department of Insurance has taken legal action against both State Farm and the FAIR Plan, accusing them of failing to adequately pay smoke damage claims. A state case alleging that the FAIR Plan illegally denied smoke damage claims is scheduled to be heard by a judge next month.