By Megan Fan Munce, SAN FRANCISCO CHRONICLE
New legislation would require California home insurers to guarantee coverage for homeowners that take steps to reduce their wildfire risk and give policyholders at least six months notice before being dropped.
The flurry of proposed laws comes a year after a set of deadly wildfires in Los Angeles County killed 31 people, destroyed more than 16,000 structures and set a new record for the costliest insured wildfire event in global history. Legislators, especially those representing the burn zones, have introduced numerous bills seeking to expand consumer protections by placing greater restrictions and penalties on insurance companies.
Senate Bill 1301, authored by state Sen. Ben Allen, D-Santa Monica, would mandate that insurance companies give policyholders at least 180 days of notice before non-renewing their policy, up from the 75 days currently required by law. It would also require insurers to provide policyholders with all of the information that influenced the decision to drop their policy, including any images taken of their home.
The bill aims to give homeowners more clarity on the reasons for their nonrenewal and to provide an opportunity for them to remedy those problems before losing coverage, according to Allen. If homeowners face unavoidable delays trying to complete risk mitigation work — such as permit processing times or materials being unavailable — the legislation would require insurers to extend coverage up to 180 days.
A second bill introduced by Allen would enhance the insurance commissioner’s ability to punish companies whose business practices are alleged to violate state laws and regulations. It was sponsored by the current commissioner, Ricardo Lara, who is termed out at the end of 2026. Allen is one of several candidates to replace him.
The Department of Insurance can investigate insurance companies’ compliance with state consumer protection laws and regulations. It has investigated several major insurers in the past, including the California FAIR Plan, and is in the midst of a probe into State Farm General’s claims handling practices following the Los Angeles County wildfires.
When the department alleges a company has broken a law or regulation, regulators can issue recommendations and pursue litigation or financial penalties. Allen’s SB1209would add the ability to fine companies up to $20,000 for every recommendation they do not follow in a given time frame, pending a hearing.
A third bill, and the most radical proposed change, would ban insurance companies from denying coverage for homes that meet a minimum set of wildfire safety standards. SB1076, authored by state Sen. Sasha Pérez, D-Pasadena, would also revoke an insurer’s ability to sell home or auto insurance in California for five years if the company doesn’t comply with the provisions of the legislation starting in 2028.
For years, homeowners in high wildfire-risk areas have complained that performing science-backed mitigation work — such as clearing out defensible space or installing enclosed eaves to shut out embers — hasn’t been enough to keep their insurance.
Existing regulations require insurers to provide discounts for a specified list of home hardening measures. Some companies also already offer to guarantee coverage for a set period of time if homeowners do this work.
Pérez’s bill goes further, explicitly prohibiting companies from dropping customers or refusing to write them a policy if they’ve invested in home hardening. It would, however, permit insurers to apply for waivers that would allow them to turn down qualified homeowners in specific geographic areas. Insurers tend to avoid writing too many policies in any given area so they would not be driven insolvent if a large fire were to take out all of the homes in that area.
If a company currently writing new policies chose to stop writing new policies altogether rather than comply with the law, SB1076 would ban it from doing business in California for five years.
The legislation leaves it to the Department of Insurance to pass regulations specifying what fire safety standards qualify homeowners for guaranteed coverage.
These bills join a large swath of new legislation proposed in the wake of the Los Angeles County fires, including proposals to mandate greater transparency during the claims process and develop statewide standards for how to safely clean homes tainted by wildfire-smoke.
Friday was the deadline for legislators to propose new legislation, although some bills arise later in the session through a process known as gut and amend, in which lawmakers substitute new language into failed bills. The Legislature has until the end of August to send passed legislation to the governor’s desk to become law.
