(Article from Insurance Law Alert, May 2025)
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Our February 2025 Alert reported on Gharibian v. Wawanesa General Insurance Co., 2025 Cal. App. LEXIS 64 (Cal. Ct. App. Feb. 7, 2025), in which a California appellate court held that the presence of ash and debris on insured property, stemming from a nearby wildfire, did not constitute direct physical loss under the policy. The appellate court emphasized that, under California law, direct physical loss requires “a distinct, demonstrable, physical alteration to property” and that the debris was easily cleaned or removed.
This month, the California Supreme Court declined to depublish the appellate court decision, paving the way for insurers to cite the decision as binding authority in future coverage litigation arising out of wildfires. See Gharibian v. Wawanesa General Insurance Co., 2025 Cal. LEXIS 2464 (Apr. 30, 2025). Gharibian reinforces limitations regarding property coverage and the burden on policyholders to establish a “physical alteration” to property—not only for wildfire-related cleanup expenses, but also for other contexts in which the underlying alleged “damage” can be easily remedied through simple cleaning measures.