--- title: "Smoke Without Fire: LA Homeowners Say Insurers Are Shortchanging Damage Claims" description: "Eighteen months after the Eaton and Palisades fires, hundreds of Angelenos whose homes survived the flames say their insurers are refusing to fully pay for smoke, soot and toxic-ash contamination — a fight that has drawn the state's regulator into legal action against the FAIR Plan and State Farm." category: "Los Angeles" category_url: https://herald.la/category/los-angeles author: "Camila Reyes" published: 2026-06-29T07:48:00.000Z updated: 2026-06-29T07:48:00.000Z canonical: https://herald.la/article/smoke-without-fire-la-homeowners-say-insurers-are-shortchanging-damage-claims tags: ["wildfires", "insurance", "Eaton Fire", "Palisades Fire", "Altadena", "California FAIR Plan", "State Farm", "Los Angeles"] --- # Smoke Without Fire: LA Homeowners Say Insurers Are Shortchanging Damage Claims Eighteen months after the Eaton and Palisades fires, hundreds of Angelenos whose homes survived the flames say their insurers are refusing to fully pay for smoke, soot and toxic-ash contamination — a fight that has drawn the state's regulator into legal action against the FAIR Plan and State Farm. Some of the most contested losses from last year's fires are the ones you cannot see. ## The damage nobody can see Elissa Ashwood's home in Pacific Palisades is still standing. The walls are intact and the roof is on, and from the street it looks like it escaped the January 2025 Palisades Fire. But industrial hygienists who tested it found pervasive smoke and chemical residue, and she says the house needs to be stripped to the studs to be safe. Her insurer, [according to her account to ABC7](https://abc7.com/post/homeowners-accuse-insurers-underpaying-smoke-damage-claims-18-months-eaton-palisades-fires/19381770/), disagrees. Hers is one of hundreds of similar disputes across Los Angeles County, where homeowners are confronting a painful truth: a house can survive the fire and still be uninhabitable — and getting it paid for can be its own ordeal. ## The scale of the disaster The Eaton and Palisades fires together rank among the most destructive wildfire events in California history. The Eaton Fire, which ignited January 7, 2025, in Eaton Canyon before sweeping into Altadena, burned roughly 14,000 acres and destroyed more than 9,000 structures, killing at least 17 people. The Palisades Fire simultaneously [tore through](https://www.nbclosangeles.com/news/california-wildfires/la-fires-palisades-eaton-wildfires/3819751/) Pacific Palisades and Malibu, destroying thousands more homes. Beyond the houses reduced to ash is a second wave of harm: homes left standing but saturated with smoke, soot and ash that can carry lead, asbestos and other toxic compounds released when modern materials burn. For those owners, the battle shifted from evacuation to adjuster. ## What homeowners are fighting for The dispute turns on a deceptively simple question: is smoke contamination a covered loss? Homeowners and their lawyers say yes, citing hygienists' findings of toxic residue in carpets, ductwork, insulation and wall cavities at homes that look fine. Proper cleanup, they argue, often requires full gut-outs, not a coat of paint. Attorney Dylan Schaffer, who represents fire survivors, said insurers "cannot ignore houses that are burned down to the ground" but try to "save money on … the neighbors whose house looks fine, but is not fine." One Palisades homeowner in her 90s paid more than $300,000 out of pocket for remediation after the [California FAIR Plan](https://www.insurance.ca.gov/0400-news/0100-press-releases/2025/release054-2025.cfm) — the state's insurer of last resort — offered $38,000, according to the state. ## Regulators step in California's insurance regulator has moved on two fronts. Insurance Commissioner Ricardo Lara announced legal action against the FAIR Plan after the Department of Insurance received more than 220 consumer complaints about smoke-damage denials and identified at least 418 alleged violations of state law — including, the department says, applying a "permanent physical damage" standard that appears nowhere in the policy or statute. "These consumers' message is clear: they need assistance, not obstacles," Lara said. State Farm, the state's largest home insurer, faces a separate review. A department examination of 220 wildfire claims [found roughly 400 alleged violations](https://abc7.com/post/california-says-state-farm-violated-law-handling-insurance-claims-2025-la-wildfires/19037952/), including denials of payment for smoke-related testing and, in one case, assigning a single policyholder a dozen adjusters in four months. Regulators have raised the possibility of suspending State Farm's ability to write new policies in California. Through complaint intervention, the department says it has recovered more than $74 million for survivors. ## What insurers argue Both insurers dispute the findings and say they have paid out heavily. State Farm reported paying $5.7 billion on about 13,700 fire-related claims and called the state's action a "reckless, politically motivated attack," rejecting "any suggestion that State Farm engaged in a general practice of mishandling or intentionally underpaying wildfire claims." The FAIR Plan and other carriers have argued in some cases that smoke damage is cosmetic rather than structural, or that contamination cannot be tied to the fires — and have leaned on their own vendors' assessments, which homeowners' attorneys say are tilted toward lower payouts. ## What comes next An administrative hearing in the FAIR Plan case is expected in the coming weeks, and legal observers say its outcome could shape how California defines smoke-damage coverage for years. For Ashwood and her neighbors, the stakes are immediate: many remain in hotels and rentals eighteen months on, watching remediation costs mount while their claims grind through dispute. The machinery moves slowly; the contamination in their walls does not. ## Sources - [Homeowners accuse insurers of underpaying smoke damage claims 18 months after Eaton, Palisades fires](https://abc7.com/post/homeowners-accuse-insurers-underpaying-smoke-damage-claims-18-months-eaton-palisades-fires/19381770/) - [Commissioner Lara takes legal action against FAIR Plan for denying smoke damage claims](https://www.insurance.ca.gov/0400-news/0100-press-releases/2025/release054-2025.cfm) - [California says State Farm violated the law in handling of insurance claims after Eaton, Palisades fires](https://abc7.com/post/california-says-state-farm-violated-law-handling-insurance-claims-2025-la-wildfires/19037952/)