Wildfire victims sue FAIR Plan over denied, underpaid smoke damage claims

Altadena and Palisades residents sued the California FAIR Plan Association on Thursday, claiming insurance bad faith and breach of contract for denying or underpaying smoke damage claims.

California's FAIR Plan -- short for Fair Access to Insurance Requirements Plan -- is a state-mandated insurance program designed to provide basic property insurance to homeowners and businesses who can't get coverage through the regular insurance market, usually because they live in high-risk areas for wildfires or other disasters.

The Palisades and Eaton Canyon (Altadena) wildfires tore through parts of Los Angeles County for several days in January, leaving behind scorched landscapes, damaged homes, and significant financial tolls. Combined, these fires led to the destruction of more than 15,000 structures, the evacuation of over 100,000 residents, and an estimated $28 billion in insured losses.

A number of attorneys representing Altadena residents who lost their homes in the Eaton Fire have questioned whether the FAIR Plan was robust enough to cover claims stemming from the January wildfires. The 10 plaintiffs who sued say that smoke damage has rendered their homes in the Palisades and Altadena uninhabitable. Yet the CFPA directed them to use mops, brooms and sponges to clean up.

The complaint filed in Los Angeles County Superior Court alleges a pattern going back nearly a decade.

"CFPA and the defendants have knowingly and deliberately put at risk the health and safety of thousands of California residents since at least 2017 for the purpose of maximizing the profits of Defendant insurers and its other member carriers, by failing to investigate and failing to pay covered wildfire claims, and by directing insureds to remediate their own homes using household cleaning methods, further evidence of Defendants bad faith, malice and oppression," Edelson PC's Ali Moghaddas wrote in the complaint.

The plaintiffs' attorneys said they expect thousands of similar lawsuits.

"Thousands of Angelinos are being forced to fight for coverage that FAIR Plan should know it has to provide. People that have already survived a wildfire shouldn't have to go another round," Moghaddas said in a statement.

Moghaddas co-counsel, Dylan Schaffer, said their clients were "stranded."

"Unfortunately, what we've learned in our years of litigating against FAIR Plan is that FAIR will push people until they push back. And that's what we are here to do," said the co-founder of Kerley Schaffer LLP.

Ronald Barak, et al., v. California Fair Plan Insurance Association, et al., 25STCV10670 (L.A. Super. Ct., filed April 10, 2025).