Court Declares California FAIR Plan’s Smoke Damage Provisions Unlawful

LOS ANGELES, July 14, 2025

Almeida Law Group announces a major legal victory in Aliff v. California FAIR Plan Association, Case No. 21STCV20095. On June 24, 2025, the Honorable Stuart M. Rice of the Los Angeles Superior Court granted in part Plaintiff’s Motion for Summary Adjudication, ruling that several core provisions of California FAIR Plan’s standard fire insurance policy are unlawful under California law. 

The Fair Plan is California’s fire insurer of last resort, covering hundreds of thousands of homes in California, including its wildfire-prone areas. In this case, Plaintiff challenged the insurer’s refusal to pay for smoke damage based on restrictive policy definitions. The Court agreed that key limitations in the Fair Plan’s policy illegally restrict fire coverage and violate the California Insurance Code. 

Specifically, the Court declared the following Fair Plan policy provisions unlawful: 

“Permanent Physical Changes” Requirement: The Court found the Fair Plan’s definition of “direct physical loss”—requiring “permanent physical changes” to property—violates Insurance Code § 2070 because it provides less coverage than the Standard Form Fire Policy required under § 2071. The Court also held this restriction was not “conspicuous, plain, and clear,” violating settled California insurance law. 

“Unaided Eye or Nose” Requirement for Smoke Damage: The policy required that smoke damage be “visible to the unaided human eye” or “detectable by the unaided human nose” and excluded laboratory testing or subjective reports. The Court found this unlawfully narrows coverage below the statutory minimum and lacks the clarity required by law. 

Dispute Resolution Procedure: The Court held that the policy’s smoke damage dispute process—which relies on visual and olfactory inspections—is unlawful to the extent it is based on the invalid definitions described above. 

The ruling represents a significant victory for policyholders seeking clarity and fairness in wildfire claims handling. 

“This decision is a major step forward for California homeowners struggling to recover from wildfire damage,” said John R. Parker, Jr., one of the attorneys for Mr. Aliff. “It confirms that the FAIR Plan cannot rely on artificial definitions that effectively erase coverage for smoke.” 

Thousands of Californians whose homes were damaged by smoke from recent wildfires may benefit from this ruling, which clarifies that insurers cannot override California’s statutory protections with hidden exclusions or restrictive wording.