Lawyers say a new California court ruling could make it more difficult for property owners to get paid for fire-related insurance claims for smoke and soot damage outside of the burn zone.
With tens of thousands of properties destroyed, and thousands more impacted by the recent Southern California wildfires, property owners are seeking whatever relief they can to get their properties and lives back on track, leading to court disputes over what constitutes coverable losses.
Marissa Sinha, a policyholder attorney at Lathrop GPM, said a recent California Court of Appeal ruling in Gharibian v. Wawanesa requires smoke and wildfire debris to cause physical damage to a property for insurance to cover “direct physical loss.”
The ruling referenced an earlier COVID-19 era ruling in which the presence of COVID-19 virus did not provide “direct physical loss” that was to be covered by insurance because the virus did not cause physical, demonstrable damage to the property.
But Sinha said documenting some form of damage could help satisfy the direct physical loss provision necessary to use insurance coverage.
“The Gharibian decision is a particularly devastating extension of the California Supreme Court’s analysis in Another Planet, in that it will potentially leave many homeowners affected by the Palisades and Eaton wildfires without coverage for losses related to wildfire debris, such as smoke, soot and ash, unless they can prove that the debris physically altered their homes,” said Sinha to The Center Square.
“A close reading of Gharibian suggests that damage such as rusting metal or oxidized vinyl caused by ash exposed to water, or damage to paint, stucco, attic insulation, or HVAC systems requiring repairs, may satisfy the requirement of ‘direct physical loss’ needed to trigger homeowners policy coverage,” Sinha said.
