Judge finds California FAIR smoke damage provision illegal

A Los Angeles judge ruled that coverage requirements for smoke damage are illegal in property insurance policies issued by the California FAIR Plan Association.

In Jay Aliff v. California FAIR Plan Association, Superior Court Judge Stuart M. Rice said this week that the last-resort fire insurer’s policies provide less coverage than state law requires.

The CFPA policies say they cover all “fire by loss” damage but include language that smoke damage is covered only if it is an accidental direct physical loss “visible to the unaided human eye, or odor from smoke or ash that is detected by the unaided human nose of an average person, and not by the subjective senses of you or by laboratory testing,” court records show.

Mr. Aliff filed a proposed class action against the insurer in May 2021, alleging that the fire loss provisions in its policies illegally require smoke damage from fires to cause “direct physical loss” with “permanent physical changes” to be covered.

In December 2024 the judge declined to certify the class. Mr. Aliff then moved for summary judgment on his claims for declaratory relief and violation of California’s Unfair Competition Law.

Judge Rice agreed with the plaintiff’s allegation about the fire loss provision but denied the motion with respect to the UCL claim.

Representatives for the parties did not respond to requests for comment.