Holy Smokes !
March 7, 2025
Holy Smokes !
Smoke damage insurance claims may have just gone up in Smoke
Debris that can be easily cleaned does not constitute “direct physical loss to property”
If the smoke causes only marginal and “evanescent” damage, then there is no “direct physical loss” to the property, because the debris (be it ash or soot) can be “easily cleaned or removed from the property”, according to the 2024 California Supreme Court decision in Another Planet Entertainment LLC v. Vigilant Insurance Co. (2024) 15 Cal.5th 1106, at 1140 ~ 1149. More recently, on February 7, 2025, in Gharibian v. Wawanesa Ins. Co. the California Court of Appeals for the Second District cited and adopted the California Supreme Court’s decision in the Another Planet case holding that:
“the long-standing California view that direct physical loss to property requires a distinct, demonstrable physical alteration of property is correct” which is the prevailing standard for smoke damage claims. To be sure, Smoke damage claims are treated differently by different insurance companies, some are more accommodating than others.
“Soot by itself does not physically damage a structure. And ash only creates physical damage to a structure if it is left on metal or vinyl and is then exposed to water.”
Gharibian v. Wawanesa General Insurance Co., California Court of Appeals, Second District, Division Two, Filed February 7, 2025, Certified for Publication.
Risk to human life or health, without more,
is not enough to validate a smoke damage claim
The Supreme Court in the Another Planet case stated that “the mere fact that a property cannot be used as intended is insufficient on its own to establish direct physical loss to property.” The Court went further to say that “The restrictions of a government public health order are legal.. in nature. They do not constitute direct physical loss or damage to property.”
Will the decision in the recent Gharibian case embolden insurance companies
to summarily deny smoke damage claims? Remains to be seen.
On March 7, 2025, the putatively-consumer-friendly California Insurance Commissioner, Ricardo Lara, reeling from the recent insurer-friendly holding in the Gharibian case, issued a bulletin 2025-7 alerting insurance companies of their legal duties to investigate legitimate smoke damage claims.
Conclusion
In smoke damage claims, the homeowner bears the burden of proving that the alleged property damage is more than just superficial and that the property has been physically altered is some way or is otherwise permanently impaired or damaged. All is not lost, however, if you think your property or business sustained damage from smoke, file your claim anyway and let your insurance company investigate first before resorting to legal action or a public adjustor. You might also explore pursuing a distinct claim against Southern California Edison for non-economic damages.
If you need assistance or have questions, send me an email to [email protected].
No phone calls please.Joseph M. Mafonde, Esq.
SBN 204686Law Office of Joseph M. Mafonde1720 E Washington Blvd. Suite 222Pasadena CA 91104
CONFIDENTIALITY NOTICE: This communication and any attachments thereto contain confidential information, which is intended solely for the exclusive use of its intended recipient or the addressee. In addition, some of the information contained in the transmission and any attachments may be legally privileged against disclosure to others. If this message was inadvertently misdirected or divulged to unauthorized recipients, sender reserves all rights to assert all confidentiality or legal privileges against disclosure and such confidentiality and privilege is not waived. If you have received this transmission in error, or if you are not its intended recipient, please notify the sender immediately. Thank you in advance for your cooperation.
Real Estate, Landlord-Tenant,
Estate Planning, Trust Administration,
Insurance Law