California's Smoke Damage Recovery Act: A Crucial Step for Insurance Claims

The California Legislature is currently reviewing the Smoke Damage Recovery Act, a significant piece of legislation aimed at establishing thorough guidelines for managing insurance claims related to wildfire smoke damage. Supported by Insurance Commissioner Ricardo Lara and authored by Assemblyman Mike Gipson, this bill emerged in response to the widespread smoke damage claims following the 2025 Los Angeles wildfires.

Introduced as Assembly Bill 1795, the legislation outlines requirements for evaluating and restoring homes affected by wildfire smoke, ensuring they are safe and habitable. It holds insurance carriers accountable, mandating the adherence to these standards to protect homeowners and streamline the claims process.

The Los Angeles wildfires led to over 42,000 insurance claims, with more than 13,000 involving smoke-damaged homes. In response, Commissioner Lara established the Smoke Claims and Remediation Task Force, which exposed inefficiencies in current processes of smoke damage inspection and restoration. This initiative underscores the necessity for regulatory compliance to better manage claims and improve risk management strategies.

Karen Collins, vice president of personal lines and environmental policy for the American Property Casualty Insurance Association, expressed the importance of clear guidelines for wildfire survivors. She highlighted, "This report provides credible, practical insights for states facing similar challenges. Insurers support testing practices grounded in credible science that guide remediation within coverage scope."

Under AB 1795, if specific standards for smoke testing and restoration are set by state or local agencies, these can be immediately utilized to enhance claims processing. Additionally, the bill proposes establishing statewide protocols for smoke contaminant inspection, enforcing remediation practices to return homes to pre-loss conditions, and prohibiting the termination of additional living expenses benefits until homes are safe.

The legislation also requires insurers to address smoke-damage claims within 30 days of notification and sets clear timelines for insurance payments to expedite financial recovery. It introduces training and certification programs for professionals involved in smoke damage assessment and remediation, ensuring compliance with established regulatory standards.

Furthermore, the bill directs state entities, including the California Environmental Protection Agency and the California Department of Insurance, to uphold consistent standards for managing wildfire smoke damage. Previously, Commissioner Lara initiated legal action against the California FAIR Plan Association for issues related to the denial and limitations of smoke damage claims, emphasizing the need for transparent underwriting and claims practices.