LOS ANGELES — In a significant step to aid wildfire survivors, California Insurance Commissioner Ricardo Lara has issued a directive compelling insurance companies to conduct comprehensive investigations into smoke damage claims and ensure policyholders receive fair compensation following the recent Southern California fires. The directive, detailed in Bulletin 2025-7, underscores insurers’ responsibilities under state law and aims to strengthen protections for consumers.
“Wildfire survivors have the right to be treated fairly by their insurance providers,” stated Commissioner Lara. “Insurers must thoroughly evaluate smoke damage claims and avoid denying them without proper investigation or pressuring homeowners into accepting inadequate settlements. My directive is clear: claims must be handled promptly, fairly, and paid in full.”
The Bulletin clarifies that insurers cannot dismiss smoke damage claims without a complete and fair assessment. Wildfires often cause extensive harm, not only through direct flames but also via smoke, soot, ash, and other hazardous materials. Property insurance policies are intended to cover these losses, including necessary remediation costs, to help residents return to their homes.
When a policyholder submits a smoke damage claim, insurers are obligated to act swiftly and reasonably. They must investigate the claim thoroughly, confirm the extent of the damage, and provide a fair settlement. The Bulletin explicitly states:
“Insurers must fully and fairly evaluate evidence of smoke damage to a policyholder’s property. When a claim is filed, companies are required to act promptly and adopt reasonable standards for investigating and processing the claim. Denying a claim without proper investigation or requiring policyholders to bear significant costs to prove their claims is unacceptable. If professional testing is necessary, insurers are expected to cover the expenses.”
Commissioner Lara also cautioned residents to be wary of scams related to smoke damage. A 2023 investigation by the Department of Insurance revealed a company that sent mass mailers to file fraudulent claims, falsely claiming the program was state-funded. The company submitted claims without homeowners’ knowledge or consent and even listed themselves as payees on some claims. The Department banned the company from operating in California and continues to collaborate with law enforcement to combat such fraudulent activities.