Smoke Is Physical Damage Which May Not Be Paid Without Verification

Smoke damage is currently a hotbed for disagreement and litigation in California and elsewhere. Insurers are paying much more attention to the severity of fire cases as the science of fire, smoke residue, and its impact has advanced significantly over the past 20 years. Attorney Kevin Pollack highlighted a commercial fire case, Bottega, LLC v. National Surety Corporation, ¹ in his excellent presentation at the Pacific Coast Association of Public Insurance Adjusters (PCAPIA) Annual Conference in Marina Del Rey. He used the case to provide several coverage and adjustment lessons.

The case involved restaurants in Yountville, California, affected by the 2017 North Bay Fires. Although the flames never reached the premises, the businesses were inundated with smoke, soot, and ash. The insurer paid a limited amount under civil authority coverage but denied business income coverage, arguing that there had been no “direct physical loss or damage.” The court wasn’t persuaded. It recognized that contamination from smoke alters surfaces, materials, and air quality, thereby impairing a property’s function and making it unfit for its intended use. The judge correctly held that smoke contamination constitutes direct physical damage, distinguishing smoke from Covid issues.

While this decision is a victory for policyholders, it also offers a reminder: proving smoke damage isn’t just about what you can see. Instead, it’s about what you can measure. The particulates left by wildfires and structural fires are often microscopic, yet they can cause corrosion, embed in fabrics, and affect human health. Many particulates are literally sucked behind walls, into attics, and into otherwise hidden crevices of a structure.

As Pollack correctly emphasized in his speech, professional testing and evidence collection are critical. Too many policyholders rush to clean and remove the easily found smoke, soot, and ash particulates. They do not even consider that they are destroying the very evidence needed to support their claims. Every adjuster and policyholder should treat the air and every surface as potential evidence. They should photograph the residue, note the odors, and call in environmental testing experts who can find and identify the composition of the contaminants.

I’ve written before that Smoke, Soot, and Ash Testing Is Important. It’s essential for the safety of future occupants of a burnt or smoke-damaged structure. “Testing is important to prove the presence and the extent of contamination, to determine what cleaning or replacement is required, and to document the loss for insurance purposes.” The Bottega case drives this home. The plaintiffs’ ability to prove that smoke infiltrated their property was crucial. The insurer’s own admissions during discovery that the fires caused smoke, soot, and ash damage sealed the question of whether physical damage had occurred. Without such evidence, that admission might never have happened.

The practical lesson here is clear. Policyholders and their advocates must be proactive. Don’t assume an insurer will acknowledge the invisible because the invisible may not exist. Get testing done early and properly. Document everything before any cleanup. Keep the chain of evidence intact. The difference between denial and payment often rests on scientific proof that the damage is real, even when it can’t be seen with the naked eye.

Thought for the Day

The eye sees only what the mind is prepared to comprehend.”
— Henri Bergson

¹ Bottega, LLC v. National Surety Corp., 21-CV-03614 (N.D. Cal.  Jan. 10, 2025). See also, Bottega’s Memorandum in Support of their Motion for Partial Summary Judgment.