California has barred insurers from ending Additional Living Expense payments, the part of a homeowners policy that covers temporary housing such as hotel stays, until a smoke-damaged home has been restored and cleared as safe to occupy. The rule is part of AB 1795, the Smoke Damage Recovery Act, which was signed and announced on Sept. 15, 2026. The California Department of Insurance calls it the nation’s first enforceable, science-based standard for smoke damage inspection, testing and restoration. Its release states no dollar cap and no percentage on the payments.
Living-expense payments now last until the home is cleared
The department’s release says the law prohibits insurers from terminating Additional Living Expense coverage on wildfire-zone properties until two conditions are met: the home has been restored, and it has been cleared for occupancy. Both conditions have to be satisfied. A policyholder displaced by smoke, ash or soot therefore cannot have the payments cut off just because a benefit period or an insurer’s own timetable has run out. The release quotes Insurance Commissioner Ricardo Lara, the bill’s sponsor, saying, “This law closes a dangerous gap that left wildfire survivors without clear standards.”
The dollar stakes come from how long a household stays out of a home. The release gives no ceiling on Additional Living Expense payments and no percentage, so the amount an insurer pays still depends on the policy’s own limits and terms, which the new law does not rewrite in any source reviewed. What changes is the end date: the payments are tied to the home’s condition rather than to a date the insurer chooses.
Insurers pay for testing, and smoke damage is presumed from the fire
Two other provisions carry direct costs. The law requires insurers to pay for necessary testing and sampling, according to the department, so a policyholder is not left to fund lab work before a home can be cleared. Governor Gavin Newsom’s office described the requirement as covering lead and asbestos testing and remediation in smoke-damaged homes within wildfire zones, with coverage that restores homes to pre-loss condition.
The law also creates a presumption of causation inside wildfire impact zones. In the words of Insurance Business, smoke damage found in surviving homes within the fire perimeter is presumed to have been caused by the fire, and the insurer carries the burden of proving otherwise. That reverses the usual posture of a dispute in which the policyholder has to show where the smoke came from.
Timelines for inspections and payment
The department’s release says the law mandates timelines for inspections and claim handling but does not list the day counts. The legislative summary on CalMatters’ Digital Democracy says insurers must inspect within 30 days and pay undisputed amounts within specified timeframes. Insurance Business adds that the personal-property actual cash value is due within 30 days after inspection and the replacement-cost payment within 30 days after the dwelling is restored. Those specifics come from secondary summaries, and the statute’s text is the controlling source for exact deadlines.
The same package also gives policyholders the right to choose their restoration contractors, requires repair estimates that return the home to its pre-loss condition while meeting health and safety standards, and sets adjuster training requirements. Claims Journal lists Assemblymember Mike Gipson of Carson as the author. Gipson said, in the governor’s release, “For homeowners who have already lost so much in a fire, the last thing a family should have to do is fight for a clear answer” about whether it is safe to return home.
When the law takes effect
AB 1795 was signed on Sept. 15, 2026 and chaptered as Chapter 240 of the Statutes of 2026, according to Digital Democracy, which also notes that the bill’s operation is contingent on the enactment of AB 1642, a companion measure by Assemblymember John Harabedian. The governor’s release lists AB 1642 among the bills signed in the same wildfire recovery package, so that condition appears to be met. The department’s release does not state an effective date. Insurance Business reports Jan. 1, 2027 as the date by which carriers must update their protocols, a date that has not been confirmed against the statute itself. Claims from earlier fires are not addressed in the sources reviewed, so whether a pending smoke claim gets the protection before that date is unresolved.
The scale of the problem is the department’s own estimate: over 13,000 of roughly 40,000 insurance claims filed after the January 2025 fires involved smoke damage to homes that never burned, according to the governor’s release. Those are the households the presumption, the testing rule and the living-expense protection are written for, and the department’s Sept. 15 release remains the primary record of what the law provides. The department’s release adds that the legislation also responds to the Lineage Logistics warehouse fire in Boyle Heights by directing the state Office of Emergency Services and the department to develop recommendations for future contamination events, a separate track from the homeowner protections above.
Home costs that continue after a disaster
Older homeowners on fixed incomes often qualify for property-tax exemptions, freezes or circuit-breaker credits that are never applied automatically. Repairs, heating and cooling bills and a property-tax bill keep arriving while a home is being restored, and each has its own application dates.
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This article was produced with AI assistance and checked against the primary sources linked above.
Warren Cohen is a finance writer based in Phoenix, Arizona, covering personal finance topics including credit, banking, and beginner investing. He earned his degree in business administration from Arizona State University and began his career working in consumer finance, where he gained direct experience with lending and credit systems. He now writes for personal finance websites and fintech platforms, focusing on clear, practical content that helps readers make informed financial decisions.
