By Sean Dilweg, Former Wisconsin Insurance Commissioner

For years, one of the hardest questions in wildfire insurance claims has been deceptively simple: When is a smoke-damaged home actually clean?

Policyholders, insurers, restoration contractors, industrial hygienists and experts have often approached that question from very different starting points. One expert might focus on visible residue. Another might test for combustion byproducts. An insurer might conclude that ordinary cleaning is sufficient. A homeowner’s expert might recommend extensive remediation based on sampling results or potential health effects.

In many cases there has been no single statewide standard capable of resolving the disagreement.

California has now decided to change that.

On September 15, Governor Gavin Newsom signed AB 1795, the Smoke Damage Recovery Act, sponsored by Insurance Commissioner Ricardo Lara and authored by Assemblymember Mike Gipson. The California Department of Insurance describes it as the nation’s first enforceable framework for investigating, testing and restoring smoke-damaged homes.

That is important for wildfire survivors. It is also potentially significant for insurers, adjusters, lawyers and expert witnesses.

The new law does not eliminate expert disputes over smoke contamination. It changes what those experts may increasingly be asked to evaluate.

California Has Established the Starting Point

One of the most consequential provisions of AB 1795 creates a presumption that qualifying smoke damage within a wildfire impact zone resulted from the wildfire. That may sound procedural, but it changes the starting point of the claim.

Previously, a homeowner could face the difficult task of proving not only that contamination existed, but that it resulted from the insured wildfire rather than preexisting conditions, ordinary household contaminants or some unrelated source.

The new framework shifts that discussion. Where its requirements are satisfied, the dispute begins with a presumption connecting the smoke damage to the wildfire rather than requiring the homeowner to establish that relationship from scratch.

That does not mean every claimed contaminant is automatically covered or that every proposed remediation measure is automatically reasonable. Policy terms still matter. Causation questions may still exist. Experts will still disagree.

But the baseline has changed.

And changing the baseline can change the entire claims investigation.

Testing Is Now Part of the Claim

AB 1795 also makes insurers responsible for necessary testing and sampling used to determine what is required to safely restore smoke-damaged property. The law establishes inspection and claims-handling timelines, including a requirement described by CDI that insurers inspect qualifying smoke-damaged property within 30 days after receiving notice of the claim or obtaining access to the property.

That is a major development because smoke claims often turn on an evidentiary problem: How do you know what is present if nobody adequately tests for it?

Testing can involve questions about sampling locations, comparison areas, methodology, compounds tested, laboratory results and interpretation of what those results mean for remediation. Those are legitimate technical questions.

But there is a substantial difference between disputing the interpretation of a test and failing to perform a reasonable investigation in the first place.

For claims professionals and experts, that distinction matters.

A future expert may increasingly be asked not simply whether a particular laboratory result proves contamination, but whether the insurer’s investigation was consistent with California’s required process. Were appropriate areas sampled? Was the testing sufficient to determine necessary remediation? Were relevant findings incorporated into the repair estimate? Was contradictory information investigated?

Those questions move the expert closer to evaluating the claims process, not simply the presence of smoke particles.

“Pre-Loss Condition” Now Has a Health Component

The law also requires repair estimates intended to restore homes to their pre-loss condition while satisfying applicable health and safety standards. CDI has emphasized that California’s approach is intended to prevent families from returning to properties before they are safe for occupancy.

That could become one of the law’s most consequential concepts.

Insurance policies have long required damaged property to be repaired or restored. But smoke contamination creates a difficult question: what does “restored” mean when the building looks repaired but contaminants may remain?

The answer can no longer depend solely on whether surfaces appear clean or whether damaged drywall has been replaced. Safety and habitability become part of the equation.

That matters particularly in homes affected by urban wildfires, where smoke may contain a complex mixture of combustion products from vehicles, plastics, building materials, household chemicals and other sources. The Palisades and Eaton fires illustrated why smoke from a modern urban wildfire cannot always be treated as the equivalent of fireplace soot.

California’s regulatory framework is moving toward the proposition that restoration must account for that reality.

Additional Living Expense Becomes Part of the Technical Dispute

AB 1795 also addresses Additional Living Expense coverage. According to CDI, insurers may not terminate ALE benefits for qualifying smoke-damage claims until the home has been restored to its pre-loss condition and cleared for human occupancy, subject to the applicable policy provisions and limits.

That creates an important connection between technical findings and insurance benefits.

Whether a home is safe to occupy can determine whether a family continues receiving money to live somewhere else. A dispute over testing or remediation therefore may no longer be simply a disagreement about cleaning protocols. It can directly affect the duration of ALE benefits.

That raises the stakes considerably.

An expert opinion that a home is habitable—or is not—may have immediate financial consequences for both insurer and policyholder. The factual foundation supporting that opinion therefore becomes especially important.

What testing was performed? What standards were applied? What contaminants were evaluated? What remediation was completed? And who determined the property was safe for occupancy?

Those questions are likely to become central parts of the claim file.

The Law Will Not Eliminate Experts

It would be a mistake to assume that AB 1795 eliminates expert disagreement.

In many ways, it may do the opposite.

The law creates a regulatory framework, but the technical implementation still matters. State agencies will need to develop and apply standards governing inspection, testing, remediation and restoration. CDI’s own Smoke Damage Claims and Remediation Task Force recognized that the scientific and technical issues are complex and that further legislative, regulatory and agency work would be necessary.

Experts will still have legitimate disputes over:

· Sampling methodology and locations

· Whether testing adequately characterized contamination

· Appropriate comparison or background levels

· The significance of particular compounds

· Whether remediation was sufficient

· Whether additional testing was necessary

· Whether a property had been restored to a safe and habitable condition

But the nature of those disputes changes when everyone begins with a common regulatory framework.

Instead of asking, “Which expert’s preferred standard should control?”, courts and regulators may increasingly ask, “Was the required standard followed, and was it applied reasonably?”

That is a very different expert assignment.

This Could Matter Even More in Bad-Faith Litigation

AB 1795 may ultimately have some of its greatest impact in insurance bad-faith cases.

A bad-faith case usually does not turn solely on whether the insurer reached the correct coverage decision. The process leading to that decision can matter enormously: what the insurer knew, what it investigated, what information it considered, how promptly it acted and whether its conclusions were supported by a reasonable factual basis.

Smoke claims have historically made that inquiry difficult because parties could disagree about the very standards against which the investigation should be measured.

AB 1795 begins to narrow that uncertainty.

A future claims-practice expert may be able to evaluate a smoke-damage file against a more identifiable sequence of obligations:

· Was the claim inspected within the required period?

· Was necessary testing performed?

· Did the insurer pay for required sampling?

· Did the repair estimate address restoration to pre-loss condition?

· Were applicable health and safety requirements considered?

· Was ALE handled consistently with the home’s actual habitability?

· Were the adjusters handling the claim appropriately trained?

That does not automatically establish bad faith when something goes wrong. A statutory or regulatory violation and common-law bad faith are not necessarily the same thing.

But a clearly defined claims standard gives attorneys, regulators and experts a much more concrete record to analyze.

It Also Gives Insurers Something They Have Needed

There is another side to this development.

Clear standards can benefit insurers too.

One of the hardest operational problems in catastrophe claims is inconsistency. When thousands of homes are affected simultaneously, carriers may rely on staff adjusters, independent adjusters, environmental consultants, laboratories and restoration companies working across enormous geographic areas.

Without a common standard, similar homes can receive very different treatment.

One adjuster may authorize testing while another refuses it. One consultant may recommend extensive remediation while another concludes ordinary cleaning is sufficient. One claims team may extend ALE while another decides the property is habitable.

That inconsistency creates consumer frustration, regulatory risk and litigation exposure.

A common framework provides insurers with an opportunity to build repeatable procedures around smoke claims: defined inspection protocols, approved testing procedures, documentation requirements, escalation rules and clearer standards for determining when remediation is complete.

In other words, AB 1795 is not merely a consumer-protection statute. It can also become a claims governance framework.

The Claim File Will Matter More Than Ever

From an expert-witness perspective, one consequence seems particularly likely.

The quality of the contemporaneous claim file will become even more important.

If an insurer decides that testing is unnecessary, the file should explain why. If testing is performed but remediation recommendations are rejected, the reasoning should be documented. If an expert’s conclusions are overridden by another consultant or claims supervisor, the record should demonstrate the basis for that decision.

And if a home is determined to be safe for occupancy, the evidence supporting that conclusion should be identifiable.

That is good claims practice even without AB 1795.

But once the state establishes a specific regulatory framework, missing documentation becomes more consequential because investigators, regulators and juries have something concrete against which to compare the insurer’s actions.

The question becomes less abstract: What did the insurer do, and can it demonstrate why?

The Real Work Begins Now

California has not solved every scientific question surrounding wildfire smoke contamination by passing a statute.

The hard technical work remains.

Agencies will have to translate the law into practical standards that can be applied across very different properties and very different fires. Insurers will have to incorporate those standards into claims procedures. Adjusters will need training. Restoration companies and environmental professionals will have to understand what the new requirements mean in practice.

And inevitably, disagreements will emerge over how those standards should be interpreted.

But California has made an important decision.

It has concluded that whether a smoke-damaged home is safe should not be negotiated from scratch in every insurance claim.

That changes the role of the expert.

The expert will still evaluate science. The expert will still analyze testing. The expert will still challenge unsupported assumptions and explain where reasonable professionals can disagree.

But increasingly, the expert will also have to answer a more structured question:

Did the insurer investigate, evaluate and resolve the smoke-damage claim according to the standards California now requires?

That is a significant change. For years, wildfire smoke litigation has often been a battle between competing experts trying to establish what the standard should be.

California has now begun establishing the standard itself.

The next generation of smoke-damage cases will be about whether insurers and their experts followed it.