Smoke Damage Recovery Act.

(1) Existing law generally regulates classes of insurance, including fire and residential property insurance. Existing law specifies the measure of indemnity under an open fire insurance policy that requires payment of actual cash value or replacement cost. If there is a covered loss relating to a state of emergency, existing law requires additional living expense coverage to be for a period of no less than 24 months from the inception of the loss. This bill, the Smoke Damage Recovery Act, would create a rebuttable presumption that if wildfire smoke, ash, soot, char, or combustion byproducts are present in a surviving residential property in the wildfire impact zone after a wildfire, then smoke damage in the property is the result of that wildfire. The bill would prohibit an insurer from terminating additional living expenses coverage for a residential property insurance smoke damage claim for a property within the wildfire impact zone until the property has been restored to preloss condition and cleared for human occupancy, as specified. The bill would require specified regulations and guidance to apply to these claims within the wildfire impact zone. The bill would make an insurer responsible for the cost of sampling and testing that is necessary to restore a damaged property to its preloss condition and render it cleared for human occupancy. If a residential property has been cleared for human occupancy, the bill would require a claim for recontamination to be considered a new claim. The bill would require an insurer that chooses to exercise its right to inspect a smoke-damaged property to inspect the property as soon as practicable, but no later than 30 calendar days after receiving notice of the claim or, if applicable, no later than 30 calendar days after access to the property is granted. The bill would require the insurer to pay the actual cash value of the cost to restore the damaged personal property to its preloss condition no later than 30 calendar days after the inspection, unless the policyholder has agreed to restoration by the insurer. For damaged residential property, the bill would also require the insurer to pay the undisputed amount of replacement cost, up to the applicable policy limits, within 30 calendar days from the date the restoration is completed, unless the policyholder has agreed to restoration by the insurer. For a portion of a smoke damage claim pertaining to the replacement of covered personal property, the bill would require the insurer to pay the undisputed amount of the replacement cost of the personal property within 30 days from the date the insurer was provided with a receipt for purchase of the replaced personal property. This bill would require the Department of Insurance, in coordination with others, to conduct a study on or before July 1, 2027, that, among other things, identifies the gaps in insurance coverage exposed by the Lineage Logistics (Lineage) warehouse fire in the Boyle Heights community in the City of Los Angeles, which broke out on June 17, 2026, including additional living expense coverage and business interruption coverage in the absence of a mandatory evacuation order triggering the coverage. The bill would require the department, on or before December 1, 2027, to submit a final written report detailing the findings and recommendations of the study to the Governor and Legislature, and would require the study to be posted on the department's public internet website. (2) Existing law, the Insurance Adjuster Act, generally regulates the licensing of insurance adjusters. Existing law, the Public Insurance Adjusters Act, generally regulates the licensing of insurance adjusters. The acts set forth various requirements with respect to operation as an insurance adjuster or public insurance adjuster. This bill would require the Department of Insurance to develop training and certification programs for insurance adjusters and public insurance adjusters in inspecting, evaluating, sampling, or testing smoke damage caused by a wildfire involving residential properties. The bill would require an insurer, adjuster firm, or qualified manager to train and accredit its adjusters in accordance with specified regulations and guidance, and would require a public insurance adjuster hired by an insured to adjust smoke damage claims to have the requisite license, training, and certification. (3) Existing law establishes the Division of Occupational Safety and Health and the Occupational Safety and Health Standards Board within the Department of Industrial Relations and sets forth their powers and duties relating to the adoption of health and safety standards for workers. This bill would require the Division of Occupational Safety, on or before July 1, 2029, to propose to the Occupational Safety and Health Standards Board regulations to protect the health and safety of employees performing work on residential properties that have sustained smoke or fire damage as a result of a wildfire. The bill would require the regulations to include requirements for the certification of individuals who perform that work and would authorize the regulations to establish fees for certification, which would be deposited into the newly created Wildfire Remediation and Restoration Certification and Training Fund for use, upon appropriation by the Legislature, to cover the costs of administering and enforcing the related requirements and regulations. (4) Existing law establishes the Office of Emergency Services within the office of the Governor, and sets forth its powers and duties, including responsibility for addressing natural, technological, or manmade disasters and emergencies, including activities necessary to prevent, respond to, recover from, and mitigate the effects of emergencies and disasters to people and property. Existing law also requires the California Environmental Protection Agency, in consultation with the Office of Environmental Health Hazard Assessment, to, among other things, determine which specified extremely hazardous substances pose a regulated substances accident risk, as specified. This bill would require, on or before December 31, 2027, the Office of Emergency Services, in consultation with the California Environmental Protection Agency, to coordinate with state and local agencies and other entities, as necessary, to conduct a study that, among other things, identifies the various entities involved in the Lineage fire incident response and recovery operations, the coordination of entities involved in the incident response and recovery operations, and the various jurisdictional oversight authorities, as specified. The bill would require the state and local agencies to provide the Office of Emergency Services and the California Environmental Protection Agency with any requested assistance. The bill would require the Office of Emergency Services, on or before July 31, 2028, to submit a final written report detailing the findings and recommendations of the study to the Governor and Legislature, and would require the study to be posted on the office's public internet website. Because the bill would require local agencies to provide specified information to state agencies, the bill would impose a state-mandated local program. The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement. This bill would provide that, if the Commission on State Mandates determines that the bill contains costs mandated by the state, reimbursement for those costs shall be made pursuant to the statutory provisions noted above. (5) This bill would the operation of its provisions contingent upon the enactment of AB 1642 of the 2025–26 Regular Session.