Insurance companies might have to start warning homeowners about cancellation

(The Center Square) – A new bill would require insurance companies to warn policy holders before their homeowners insurance is cancelled.

Senate Bill 1301, authored by Sen. Ben Allen, D-El Segundo, aims to make insurance companies explain to homeowners why the company is refusing to renew a homeowners insurance policy. That could range from being in a fire hazard area to having an old roof, according to a legislative analysis of the bill.

The homeowner then has 90 days to remediate the problem before their insurance policy is cancelled, according to that analysis.

Allen did not respond to The Center Square on this story before press time on Thursday. However, advocates of the bill told The Center Square Thursday that the rise of nonrenewals in California has made the Golden State a national hotspot for cancelled policies.

“Consumers often have little information about the reason for the nonrenewal, and have no path to correcting a problem before their policy gets cancelled,” Carmen Balber, executive director of nonprofit Consumer Watchdog, told The Center Square Thursday. “This bill gives folks more notice, a path to remediate the problem if there is one, and the ability to keep their coverage.”

However, some homeowners get notification that their insurance policy is going to be cancelled because their home is in close proximity to – or inside – a fire risk area. That is a problem a homeowner can’t fix, Balber said.

“You can’t really change that,” Balber said. “This bill would not allow you to keep your coverage in that circumstance. It would require them to give you more notice in order to have more time to shop around.”

Opponents of the bill said that in its current form, SB 1301 would expose trade secrets in the insurance industry, oversimplify complex risk assessment methods often used in the residential property insurance market and discourage insurance companies from doing business in California. But recent amendments to the bill have reduced opposition.

“We were initially very strongly opposed to the bill, particularly the timeframe for homeowners who have an opportunity to mitigate,” Mark Sektnan, vice president of American Property Casualty Insurance Association, told The Center Square Thursday. “The way the bill was drafted, it would have created a situation where a homeowner could basically hold on to their policy for two years and not do any mitigation.”

Discussions are continuing over more amendments about the kind of information sent to homeowners as part of their notification of nonrenewal, including community maps showing other homes in the area that face the same mitigation issues that could cause nonrenewal.

“The truth on this is that we don’t necessarily have those maps, and when we do they’re proprietary, so we’re kind of working on that,” Sektnan said.

Research published by Stanford University in June shows that home insurance premiums are up 84% statewide since 2020, regardless of a home’s location in relation to a fire zone. That research also found that seven of the 10 largest home insurers in the state reduced or halted new homeowners insurance policies in California, and that average deductibles grew from $1,813 to $2,553 between late 2020 and March 2026.