As policyholders take inventory of their losses and start the daunting process of rebuilding their properties and their lives, the California Insurance coverage Commissioner continues to deal with varied policyholder considerations and insurance coverage protection points as they come up. The Division of Insurance coverage periodically points bulletins, notices, and opinions to make clear the division’s official interpretation of sure points or legal guidelines.
ALE (Further Residing Bills) and Uninhabitable Properties
On February 14, 2025, California Insurance coverage Commissioner Ricardo Lara issued a Discover addressing ALE, well being, and security. Policyholders had been reporting that their insurance coverage firms are terminating ALE funds as a result of their properties are nonetheless standing and due to this fact “liveable.” Commissioner Lara addressed the continued well being and questions of safety arising from the hearth particles and ash which can include asbestos, heavy metals, chemical substances and different hazardous substances. This fireplace particles and ash could pose important threats to public well being by way of inhalation of mud particles and contamination of consuming water.
On February 11, 2025, Los Angeles County Public Well being issued a powerful advisory to residents close to the Palisades Fireplace and the Eaton Fireplace burn areas. The advisory calls residents’ consideration to the hazards related to fireplace particles for people residing inside 250 yards of a burned construction inside the burn space. The advisory goes on to advise that residents in these areas could face an elevated danger of publicity to hazardous substances from ash, soot and fireplace particles earlier than the completion of Section 1 (hazardous supplies removing) and Section 2 (fireplace particles removing): “Publicity to those supplies could result in bodily well being signs and should pose long-term well being impacts.”
California Insurance coverage Code part 2060(b)(2) was amended after the Camp Fireplace in Paradise in 2018 to broaden “Further Residing Bills” to conditions the place a house is uninhabitable because of a lined peril, equivalent to wildfire. Part 2060(b)(2) states:
“A coverage that gives protection for extra dwelling bills topic to this subdivision shall not restrict the policyholder’s proper to restoration if the insured house is rendered uninhabitable by a lined peril. Nonetheless, an insurer could, in lieu of creating dwelling expense funds required by this subdivision, present an inexpensive various treatment that addresses the property situation that precludes affordable habitation of the insured premises…”
Commissioner Lara additionally famous that whether or not a residence is uninhabitable is not restricted to conditions the place energy, water, or sewer programs are disrupted: “A residence could also be deemed uninhabitable because of well being and security causes, equivalent to these described by the LA County Well being notices.”
Commissioner Lara urged all insurance coverage firms to train due diligence in figuring out whether or not a house is liveable or uninhabitable and that the truth that an space is now accessible doesn’t routinely imply that the residences in that space are liveable particularly when contemplating the on-going well being and questions of safety being addressed by the LA County Public Well being Division. Commissioner Lara went additional to state that whereas the February 11, 2025 County Public Well being Advisory stays in impact, policyholders within the impacted areas ought to proceed to obtain ALE advantages until the policyholder chooses to inhabit their residence.
Smoke Injury Losses
Not too long ago, various courtroom circumstances have addressed insurance coverage protection for smoke harm losses. Commissioner Lara issued a Bulletin on March 7, 2025 addressing these selections and clarifying that they don’t help the proposition that smoke harm is rarely lined as a matter of legislation.
Commissioner Lara went on to advise that the Division of Insurance coverage expects insurers dealing with smoke harm claims to adjust to the California Insurance coverage Code provisions governing claims settlement practices, together with with out limitation, California Insurance coverage Code part 790.03(h) and all different relevant legal guidelines and laws.
In that vein, an insurer should:
- Undertake and implement affordable requirements for processing smoke harm claims;
- Should make good religion efforts to effectuate immediate, honest and equitable settlements of smoke harm claims the place legal responsibility in all fairness clear; and
- Should conduct and diligently pursue an intensive, honest and goal investigation of a declare.
Commissioner Lara additional famous it isn’t affordable to disclaim a smoke harm declare with out conducting an acceptable investigation and it isn’t thought of affordable for the insurer to require insureds to incur substantial prices to research their very own claims. If skilled testing is required for a selected declare, the Division of Insurance coverage expects the insurance coverage firm to contract and pay for these providers.
At dwelling exams can be found for asbestos and different smoke harm contaminants and the Commissioner urges the insurance coverage firms to offer these low value exams to their insureds as a primary step in responding to and investigating smoke harm claims. Relying on the outcomes of the at-home exams, insurance coverage firms then ought to take into account skilled testing.
