Where There’s Smoke, There’s Not Always Fire Coverage

Jun 05, 2025 / Insight

Where There’s Smoke, There’s Not Always Fire Coverage

Hovik Gharibian and Caroline Minasian, homeowners in Granada Hills, California, filed a claim with their insurer, Wawanesa General Insurance Company, after the 2019 Saddle Ridge Fire left their property covered in soot, smoke, ash, and wildfire debris. Although the fire did not reach their home, they asserted that the resulting debris and lingering odors constituted a “physical loss” under their homeowner’s insurance policy

Holding: If wildfire smoke and debris do not cause a demonstrable physical alteration to a property, there is no coverage under a direct physical loss policy. Gharibian v. Wawanesa General Ins. Co., No. B325859, 2025 WL 426092 (Cal. Ct. App. Feb. 7, 2025)

Summary: After Plaintiffs filed their claim, Wawanesa paid Plaintiffs over $20,000 for professional cleaning services. Plaintiffs chose to clean their house themselves. Dissatisfied with the resolution of their claim, Plaintiffs sued Wawanesa.

The trial court granted Wawanesa’s motion for summary judgment because Plaintiffs did not suffer a “direct physical loss.”

The Second District Court of Appeal affirmed. The court analogized a COVID-19 insurance case requiring “a distinct, demonstrable, physical alteration to property” to establish “direct physical loss.” Another Planet Entertainment, LLC v. Vigilant Ins. Co. (2024) 15 Cal.5th 1106, 1117.

Like the COVID-19 virus, wildfire debris – at least here – did not alter the property in a lasting and persistent manner. The debris could be cleaned or removed without altering the property, and the smell of smoke dissipated in a few months. Wawanesa’s payments did not create a coverage obligation or waive its defenses.

Why It Matters: This case highlights the ongoing tension between insurers and policyholders when interpreting coverage for wildfire-related damage, especially for unburned properties. California authorities continue to interpret “direct physical loss” narrowly. As a result, property owners must be prepared to show why the loss resulted in a permanent physical alteration to their property to justify coverage.