Their homes survived the recent wildfires, but some homeowners said dealing with their FAIR Plan insurance is keeping them from moving back in.

According to the Department of Insurance, the California FAIR Plan must cover smoke damage, but a group of homeowners told CSB News Los Angeles their FAIR Plan is denying or undervaluing their smoke claims.

"The first thing when I walked in, it smelled awful," said Keith Stoller, a homeowner in the Pacific Palisades.

Stoller's townhome that he shared with his wife and daughter survived the Palisades Fire, but not the ash and soot that came with it.

"I have a door that opens to the balcony, and it had blown open, and there was ash and dust on the floor, tons of ash and dust all over my bed," Stoller said.

Stoller filed a claim with his insurer, the California FAIR Plan.

"I assumed that they were going to pay, in fact, the first conversation I had was 'yeah, submit your information and we will do the best to get you what you deserve,'" Stoller said.

But the FAIR Plan decided his smoke damage was less than his $2,500 deductible.

"They're just saying the smell is the only thing you need to pay to get out of your house, and you could just get a hydroxyl machine for three days and that would take care of it all," Stoller said. "As far as the toxic materials, the ash, you got to sweep that up yourself."

He paid out of pocket to have his house tested for toxins and the preliminary report found unsafe levels of lead and lithium. The testing company recommended "intrusive and substantial" remediation, including removing all insulation in the attic and crawl space.

Stoller said he was getting quotes of up to $26,000 and $28,000.

CBS News Los Angeles asked insurance expert Karl Susman if the FAIR Plan has to cover smoke damage based on California law. Susman said yes, but also added it goes back to a hearing back to the summer of 2022.

"When the Department of Insurance looked at the California FAIR Plan's handling of smoke damage claims in prior years, they found that they were not in compliance with California law, so much so that they had to go back and reopen 59 claims and pay them," Susman said.

The insurance commissioner told the FAIR Plan to update its policy language to properly cover smoke damage, but state lawmakers say that hasn't happened.

"They've been foot-dragging. I think it's really incumbent upon all of us who are involved in this effort to ensure that the FAIR Plan we really understand the implications of smoke damage," California Sen. Ben Allen said. "It does render in most cases right now, with the close proximity of these properties to the fire, it renders those homes uninhabitable."

Blossom Wright has the FAIR Plan for two rental units next to her home in Pasadena, just on the border of Altadena. She was told her smoke damage wouldn't be covered by the FAIR Plan, other than changing the insulation and HVAC system.

"Just ignoring that there is soot, ash and char throughout the inside of the home with toxins you can't make an assessment on just by looking at it," Wright said.

Wright explained she feels the FAIR Plan is expecting homeowners to clean their properties themselves.

Sen. Allen said it's difficult to police the FAIR Plan, because it isn't a state agency, even though it was formed by the state back in 1968.

In a statement to CBS News Los Angeles, the Department of Insurance said, "all insurance companies, including the California FAIR Plan, are required by law to adopt and implement reasonable standards for processing smoke damage claims," and also said it "is not reasonable to deny a smoke damage claim without conducting an appropriate investigation."

Both Stoller and Wright said they worry in order to feel safe, they'll have to pay for the cleanup themselves.

"It just really feels like an example of tell everybody no, pushback and then only give in when the chorus is loud enough that we have to act," Wright said.

CBS News Los Angeles reached out to the FAIR Plan and a spokesperson said they approve all covered claims, including smoke claims, consistent with California law. However, they clarified the FAIR Plan requires direct physical loss for there to be coverage.

The Department of Insurance said if a homeowner's claim is denied, they should file a complaint so it can be investigated.