California Passes First Statewide Standards for Wildfire Smoke Insurance Claims
Sacramento, Monday, 7 September 2026.
California lawmakers passed landmark legislation establishing first-in-the-nation standards for wildfire smoke damage claims, forcing insurers to inspect properties within 30 days and fund proper toxic contamination testing.
Legislative Response to Wildfire Claims
California state legislators have passed two major bills aimed at establishing the nation’s first standardized guidelines for wildfire smoke damage insurance claims [1][2]. The legislation addresses a critical gap in property insurance, where tens of thousands of policyholders faced claim denials due to a lack of legal definitions for smoke damage [1]. Assembly Bill 1642, authored by Assemblymember John Harabedian, a Pasadena Democrat, establishes testing standards for toxic contaminants [1][2]. Assembly Bill 1795, authored by Mike Gipson, mandates insurer compliance and requires property inspections within 30 days of claims [1][2]. Both bills passed the legislature on September 5, 2026, and await the governor’s signature before the September 30, 2026 deadline [1][2]. If signed, the laws will direct funding toward home fire-protection measures and clarify insurer liabilities to reduce litigation [1].
Litigation and Market Context
On August 29, 2026, Los Angeles County filed a lawsuit against State Farm, alleging unfair business practices regarding the denial of smoke-damage claims [1][3]. The county alleges the insurer discouraged environmental testing and refused to reimburse policyholders for independent testing related to 2025 fire claims [1]. State Farm holds approximately 20% of California’s property insurance market, making the lawsuit significant for the industry [1][2]. Following the January 2025 wildfires in Los Angeles County that destroyed over 16,000 structures, the California Insurance Department reported that over 13,000 of 40,000 total claims involved smoke damage [1][2]. This represents 32.5 of all claims filed during the period [1][2]. State Farm spokesperson Sevag Sarkissian stated the company strongly disagrees with the county lawsuit’s characterization of the company’s claims response [2][3]. Los Angeles County Supervisor Kathryn Barger noted that delays and denials keep families from rebuilding and slow community recovery [3].
Implementation Timelines and Standards
Under Assembly Bill 1642, the Department of Toxic Substances Control is required to create standards for lead and asbestos testing, repair, and removal by December 31, 2028 [1][2]. Standards for other contaminants like heavy metals, cyanide, and lithium must be established by December 31, 2029 [1][2]. Senate Bill 876 mandates insurers assign a primary point of contact within 30 days of a claim and submit detailed disaster response plans to the insurance department by April 1, 2028 [1][2]. Senate Bill 877 mandates that insurers provide customers with all preliminary and final calculations regarding loss and repair costs within 15 days of a request [1][2]. Senate Bill 878 requires insurers to pay the cash value of a property within 30 calendar days of it being declared a total loss [1][2]. Failure to meet these deadlines triggers accrued interest payments to the policyholder [1][2].
Impact on Survivors and Industry
Many wildfire survivors remain displaced 21 months after the January 2025 fires due to lingering toxic hazards and disputes with insurance companies [1][2]. Elisa Jacobs Nixon, a displaced resident, stated that the situation has hijacked her life and her kids’ lives [1][2]. Jane Lawton Potelle, founder of Eaton Fire Residents United, emphasized that living in a contaminated home can make people sick and devalue property [1][2]. Karen Collins, vice president at the American Property Casualty Insurance Association, stated the industry is technically opposed to the bills and urged that standards remain grounded in science [1][2]. Adjuster Brian Haden questioned whether the insurance department will enforce the new regulations [1][2]. The state seeks to offer relief to wildfire victims navigating disaster recovery through these measures [1].