Insurance and Wildfire Damage: What Policies Cover Toxic Exposure?

For several weeks in January and February 2025, wildfires ravaged much of Southern California. These fires destroyed and damaged many homes and businesses. Many of these structures were built before 1980 and therefore most likely contained asbestos. The full effect of the asbestos-laced smoke that covered much of the region won’t be known for several decades, but it’s safe to say that the health crisis could be one of epic proportions. More on that below.

Individual homeowners and business-owners usually aren’t financially responsible for damages in these cases. As outlined below, several kinds of insurance policies cover toxic exposure. However, policyholders are indirectly financially responsible for these damages. When a victim files a claim, the insurance company usually raises the policyholder’s rates to pay for the claim. Furthermore, in some cases, the company may deny coverage.

Homeowners and business-owners aren’t the only victims of widespread asbestos poisoning. The many health victims stand to lose a lot more than money. An asbestos exposure lawyer goes to court and obtains the compensation these victims need and deserve. Asbestos exposure lawyers also work with property owners to navigate the complex joint and several liability laws in California and other states. In many cases, an asbestos provider, usually a manufacturer, is legally responsible for damages in these cases, not the homeowner or business-owner.

Asbestos Exposure Illnesses

In most wildfires and other blazes, smoke causes much more property damage than flames. Smoke also causes many more personal injuries. Usually, flames are only dangerous when people touch them. But people for miles around breathe toxic smoke. 

The danger is even greater when asbestos is in that smoke. These microscopic fibers easily absorb directly through the skin, through orifices like sweat glands. Therefore, people can take smoke inhalation precautions and still fall victim to asbestos exposure illnesses.

A big part of any insurance claim is connecting the illness to the qualifying event. So, before we break down insurance coverage that applies to wildfire damage, we should look at some major asbestos exposure illnesses.

Mesothelioma

Mostly due to treatment advances, lung cancer survival rates have improved significantly since the 1990s. Radiation therapy is a good example. Doctors now direct radiation blasts directly at cancer tumors, so they can turn up the dial without causing collateral damage to other organs.

But mesothelioma’s survival rate hasn’t improved much, if at all. Advanced treatments are only effective if doctors quickly diagnose the illness and take proper action. Mesothelioma is hard to diagnose. Most environmental and occupational cancer victims don’t have inherent lifestyle or genetic risk factors. So, doctors have no reason to suspect cancer, and they don’t test for it. 

As a result, by the time doctors detect mesothelioma tumors, the lung cancer is usually in Stage II or Stage III. At that point, treatment options are limited, at best.

Digestive Tract Cancer

Asbestos fibers often cause stomach, throat, and intestinal cancer. The toxic fibers alter cell DNA, causing them to multiply much too quickly. The resulting tumors draw nutrients away from healthy cells, a process that’s usually fatal.

Furthermore, asbestos fibers increase the number of free-radical particles in the body. These particles cause various kinds of cancer.

The good news is that digestive tract cancer is somewhat easier to treat than mesothelioma lung cancer. Stomach and other digestive tract tumors usually form inside a digestive tract organ, making them easier to find. Mesothelioma tumors usually lurk in the tick membranes of the mesothelium (layer between the heart and lungs), meaning they’re largely invisible until they spread to the lung.

The bad news is that intestinal cancer is even harder to link to asbestos exposure. So, instead of partnering with an asbestos exposure lawyer, these victims try to combat their illnesses on their own.

Lung Disease

Asbestosis and pleural thickening are the two most common, and two most hazardous, asbestos exposure-related lung diseases.

Popcorn lung, or asbestosis, is constriction of narrow breathing passageways inside the lungs. Asbestos fibers burn the tissue that lines these airways, causing scar tissue to form. Over time, this scar tissue blocks these airways. This damage is irreversible.

Pleural thickening is an asbestos-related inflammation of the pleural layer that lines the inside of the lung. When the aforementioned scar tissue spreads to this layer, it causes inflammation. Like asbestosis, pleural thickening is not curable, but treatment can help manage symptoms.

Insurance and Wildfire Damage Coverage and Claims

Asbestos exposure affects victims in all walks of life. Several different kinds of insurance policies protect these different kinds of victims.

Environmental Liability Insurance (EIL) and Commercial General Liability (CGL)

EIL, which is usually a homeowners’ insurance rider, protects most private homeowners from liability. It covers property loss and liability arising from pollution-related damages for sites that have been inspected and found uncontaminated. It is usually written on a claims-made basis so policies pay only claims presented during the term of the policy or within a specified time frame after the policy expires. It limits liability insurers’ exposure to unknown future liabilities.

That last item is critical. The latency period for asbestos exposure illnesses is usually at least fifty years. 

For many years, most CGL policies provide little coverage for pollution damage. Then, shifting coverage for pollution losses from the standard GL policy to the environmental liability policy significantly changed commercial insurance policies. The change is attributable both to America’s growing sensitivity to environmental concerns and insurers’ growing understanding of the potential exposure.

Additionally, if the CGL excludes pollution damage, exceptions usually include smoke from an out-of-control fire or fumes from a faulty heating or air-conditioning system.

Workers’ Compensation

Many volunteers pitched in to help California wildfire victims. In many cases, these efforts were basically public relation ploys. For example, a bank might send tellers to pass out water bottles. Even if the work is unrelated to their job descriptions, and even if the workers were off the clock and didn’t get paid, workers’ compensation insurance most likely covers toxic smoke-related claims.

Workers’ compensation insurance applies to all work-related injuries even if the illness, like mesothelioma, doesn’t appear for many years after exposure. 

VA Disability

SoCal has an unusually high concentration of military bases. When these older facilities burn, servicemembers are exposed to asbestos and other toxins. Once again, even if the asbestos exposure illness surfaces decades after the 2025 California wildfires, these victims are still eligible for VA disability benefits.

Usually, full VA disability benefits, which include monthly cash and medical bill payment, are available even if a pre-existing condition, like smoking, contributed to the asbestos exposure illness.