A Los Angeles County judge has ruled that the California FAIR Plan Association’s smoke damage policy violates state law, marking a significant victory for homeowners who have faced denied or underpaid claims from the state’s insurer of last resort.
Judge Stuart M. Rice found that the FAIR Plan’s policy definition of “direct physical loss” fell below the statutory minimum required by California law. The ruling validates claims that the FAIR Plan has systematically underpaid or denied smoke-damage claims affecting thousands of policyholders since 2017.
Managing Partner Shant Karnikian provided insight on the ruling’s significance to the Daily Journal, stating “If I were the FAIR Plan I’d be terrified right now. This is no longer people arguing they’re being unfairly treated. The court has ruled the policy violates California law. The playbook is out there now to make the same arguments in other FAIR Plan cases.”
Law firms have filed 31 lawsuits against the California FAIR Plan over smoke damage claims, with hundreds more in preparation. For homeowners who have faced denied smoke damage claims, this ruling offers hope for potential recovery.
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