California Court of Appeal Clarifies Homeowners Insurance Coverage in Wildfire Debris Cases
February 17, 2025 – The Second Appellate District of the California Court of Appeal has affirmed a lower court’s ruling regarding homeowners insurance policies and wildfire debris. The court determined that the presence of wildfire debris on a property, without any associated burn damage, does not qualify as “direct physical loss” under the terms of a standard homeowners insurance policy.
This ruling, in the case of Gharibian v. Wawanesa General Insurance Co., has significant implications for insurance claims arising from recent wildfires, particularly those that occurred in the 2025 Los Angeles area. The decision provides clarity on the scope of coverage and the requirements for policyholders seeking to recover damages related to wildfire events.
Background of the Case
The plaintiffs, Hovik Gharibian and Caroline Minasian, held a homeowners insurance policy with Wawanesa General Insurance Co. In October 2019, a wildfire near their home caused debris to enter the property, including the home and the pool area. Importantly, the property sustained no burn damage from the fire.
The homeowners initially filed a claim with Wawanesa. The insurance company provided payments totaling over $20,000 for professional home cleaning services and $2,400 for pool cleaning. Ultimately, the homeowners chose to clean the property themselves rather than utilize the professional services covered by their insurance. During this period, the plaintiffs hired a certified industrial hygienist/consultant to assess the property. The consultant’s findings confirmed that there was no evidence of heat or burn damage.
Subsequently, the homeowners initiated legal action against Wawanesa, alleging breach of contract and breach of the implied covenant of good faith and fair dealing. Following discovery, Wawanesa filed a motion for summary judgment, arguing that the plaintiffs had not presented sufficient evidence to demonstrate that the wildfire debris fell within the purview of the policy’s coverage. Wawanesa highlighted the policy language requiring “direct physical loss” and the consultant’s testimony confirming the absence of physical damage. The insurance company also asserted that previous payments for non-covered debris did not create coverage where it did not otherwise exist under the policy’s terms.
In response, the plaintiffs cited legal precedent suggesting that damage can occur from airborne particles that are invisible to the naked eye. They also presented a declaration from their consultant stating that ash, when combined with water, could cause physical damage. The declaration further stated that property cleaning might compromise the property’s integrity, necessitating further evaluation for uncovered damages.
Court’s Findings
Despite the plaintiffs’ arguments, the trial court granted Wawanesa’s motion for summary judgment, which the plaintiffs then appealed. The appellate court began by stating well-established insurance contract interpretation rules. Unless parties define a technical or special meaning, standard contractual interpretation applies, and the burden is on the insured to prove a claim falls into the coverage scope. The Court emphasized that a forced construction of the policy’s insuring clause to bring a claim into coverage would not be entertained.
The appellate court concluded the trial court correctly granted summary judgment. To have prevailed, the plaintiffs needed to establish, or at least create a triable issue of fact, showing the claim was covered by the policy by demonstrating “direct physical loss to property”. Under California law, “direct physical loss” necessitates a “distinct, demonstrable, physical alteration to property,” even if not visible to the naked eye.
The court found that all presented evidence indicated that the debris did not “alter the property itself in a lasting and persistent manner” as the debris could be readily removed. The court deemed payments made by Wawanesa, although for expenses not covered, as irrelevant to the question of “direct physical loss” under California law. The court held that payment for an uncovered claim cannot be the sole basis to construe an admission of liability or an acceptance of an obligation that the policy did not create. The Court affirmed the trial court’s judgment, awarding court costs to Wawanesa.
