California Court Sides With Insurers on Wildfire Debris Damage

A California appeals court slashed coverage for losses related to smoke damage in a homeowners insurance dispute, dealing a major blow to policyholders in the state.

Applying a test established by the state’s high court in 2024, the California Court of Appeal, Second District, held in a Feb. 7 opinion that wildfire debris doesn’t constitute “direct physical loss to property” and therefore isn’t covered.

The ruling comes as the Los Angeles area has been ravaged by fires, resulting in property and capital losses estimated as high as $164 billion.

Insurers will likely rely on the opinion to deny coverage ...