CA| The California Department of Insurance has issued Bulletin 2025-7 to guide property and casualty insurance companies handling smoke damage claims from wildfires in California. The bulletin clarifies that recent court cases, such as Another Planet Entertainment, LLC v. Vigilant Insurance Company and Gharibian v. Wawanesa General Insurance Company, do not eliminate coverage for smoke damage as a matter of law. Instead, coverage depends on policy language and specific claim facts.
Some Key Points:
- Coverage for Smoke Damage: Smoke damage can be covered under policies insuring against “direct physical loss of or damage to” property, as confirmed by the California Supreme Court in Another Planet. The Gharibian case is limited to its specific facts and does not conflict with this principle.
- Handling of Claims: Insurers must comply with California Insurance Code provisions and conduct thorough, fair investigations. They should make good faith efforts to settle claims promptly and equitably when liability is clear. Insurers are expected to pay for necessary professional testing if warranted.
- Investigation and Testing: The Department encourages insurers to use low-cost at-home test kits as a first step in investigating smoke damage claims. If these kits indicate further testing is needed, insurers should contract and pay for professional services to ensure thorough investigation and processing of claims.