By Eli Flesch, LAW360
The California governor’s veto of an insurance transparencybill is a setback for fire survivors and others who take issue with insurers’ loss estimates, according toconsumer groups and advocates.
While initial paperwork on damage estimates can still be accessed through litigation with insurers, the bill would have given policyholders a more straightforward way to see whether insurers are seeking to limit coverage, said Carmen Balber, the executive director of Consumer Watchdog, a public interest nonprofit that took a leading role in supporting the bill.
Absent a statutory requirement, many policyholders are left in a position to receive underpayments for major property losses, she said.
“When insurance companies have to show their work, they’re going to have to justify it, and so it’s going to keep the final estimate for consumers closer to the accurate number,” Balber told Law360 Insurance Authority.
Despite overwhelming support by state lawmakers, Gov. Gavin Newsom vetoed S.B. 877 on Sunday. Introduced by Sen. Sasha Renée Pérez, D-Pasadena, the bill aimed to bring transparency to an aspect of the claims handling process that has become a challenge for policyholders across the country following natural disasters.
Backers said S.B. 877 was meant to ensure that policyholders could more freely access information about how adjusters and insurers were valuing their losses and require carriers to proactively provide original loss estimates.
The bill was later revised to address insurer concerns; the final version said carriers would need to turn over original estimate information only at a policyholder’s request.
At a June legislative hearing, a representative for the Personal Insurance Federation of California said the change helped move the industry lobbying to a neutral position on the legislation.
The bill ultimately passed the state Senate unanimously in a 40-0 vote, while support in the state Assembly was similarly lopsided, coming in at 78-1.
Among other benefits, the bill would have given consumers more information sooner in the claims process to challenge insurers, Balber said, including through a lawsuit.
She noted that insurers are required by law to still keep original loss estimates, and they can still potentially be made available to policyholders through litigation.
“Let’s say you’re someone who only got the final estimate, and it was half of what you expected,” Balber said. “People do file bad faith claims in those instances, and those lawsuits uncover the original documents.”
Advocates said the measure could also help consumers litigate bad faith suits against insurance companies by giving them a better idea earlier in the claims process of whether they have a reason to challenge an insurance company’s coverage offer.
“This measure received unanimous bipartisan support because it was the right policy for fire survivors who had been experiencing reduced claims payments without receiving clear answers about why their payments had been reduced,” Pérez said in a statement.
A 2023 law in Florida made it illegal to alter or amend an adjuster’s report without explaining changes that resulted in a lower estimate. The law also contains document retention provisions and further stipulates that altered reports include the identities of anybody who ordered changes.
Concerns over insurance company changes to loss estimates were heightened following a CBS “60 Minutes” investigation in 2024 that found a number of insurers in Florida altered licensed adjusters’ damage reports to limit hurricane coverage payouts.
Shortly after that report, and in anticipation of Hurricane Milton, the state’s Department of Financial Services issued an emergency order requiring adjusters to use electronic loss estimating programs. The agency also prohibited them from changing price inputs without documented support that the prices reflect market rates for repair expenses.
At a May 2025 U.S. Senate hearing on insurers’ practices following natural disasters, one licensed insurance adjuster expressed “repeated frustration” in handling claims for Allstate, saying the carrier frequently rejected loss estimates or changed them in such a way as to reduce coverage, including by reclassifying line items to minimize costs.
With that kind of attention on the issue, California advocates said they were puzzled by the veto.
In a statement to lawmakers accompanying the veto, Newsom said S.B. 877 and another bill related to penalties for claim delays, S.B. 878, “codify existing technical regulations and guidance” to clarify claim document definitions and specify time frames for claims payments to policyholders.
Newsom’s characterization is inaccurate, as there is no state regulation that says original loss estimates need to be provided, Balber said.
“It was a pretty simple bill asking for transparency that is necessary for accountability,” said Joy Chen, executive director of Every Fire Survivor’s Network, a group formed after the Eaton and Palisades fires to help provide resources and aid to those affected by the disasters. “So there doesn’t seem to be any good reasons for it to be vetoed.”
Balber said she believed Newsom’s veto was retribution against her group and EFSN for their opposition to the governor’s plan, raised in the final days of lawmakers’ 2026 session, to reduce the liabilities of investor-owned utilities responsible for starting fires.
The plan would have eliminated insurers’ ability to recoup funds for claims they pay stemming from such disasters, but it ultimately failed to garner enough support.
“I think it was survivors’ voices that ultimately prevented him from getting what he wanted in a very, very rare refusal by the Legislature to buck the governor,” she said.
A spokesperson for Newsom’s office said the veto message speaks for itself and noted that Newsom recently signed legislation to establish safe-occupancy standards for smoke-damaged homes and expand insurers’ obligations for related claims. He also recently set up a state budget-funded $100 million program to help homeowners secure rebuilding funds that insurance won’t cover, the spokesperson said.
S.B. 877’s supporters say the next battle over estimate transparency will likely happen when Newsom’s successor is governor.
“We definitely intend to talk about how to bring this issue forward again,” Balber said. “I don’t have the exact path, but it’s an issue that’s not going away, and we’re not going to stop working on it.”
–Editing by Emma Brauer.
