INSURANCE REFORM WILL BETTER PROTECT CALIFORNIANS FROM LOSING COVERAGE

The following information was released by California State Senator Ben Allen:

In the face of a difficult insurance market, SB 1301, authored by Senator Ben Allen (D-Pacific Palisades), was recently signed into law to help more Californians at risk of losing their coverage on the private market.

"Californians are facing more expensive and fewer insurance options to keep their families secure right now, exacerbating the broader affordability crunch we're all feeling," said Senator Allen. "With this new law, we will soon have commonsense protections that will prevent more people from being wrongfully or unnecessarily dropped by their insurer, helping consumers stay privately insured and protected from disaster. I'd like to thank Governor Newsom for signing this into law to provide this needed assistance for homeowners."

Insurers are required to send a "nonrenewal" notice to inform a policyholder that they will not continue covering their property beyond the current contract term. Californians have faced the fourth highest rate of being nonrenewed in the country, and these notices often provide little-to-no detail explaining the decision. This can leave people scrambling to find new coverage, often forcing them onto the heavily subsidized FAIR Plan which has more-than tripled its total exposure since 2022.

SB 1301 requires insurers to explain why they are dropping a policyholder, including by identifying a specific risk to the property, and then provide an opportunity for the policyholder to maintain their coverage by addressing the risk to meet the insurer's underwriting standards.

Such transparency will help consumers contest documented instances of faulty reasoning for nonrenewal, such as mold or algae on a roof that never actually existed, as well as guide property owners to take necessary steps that will lower the overall risk of their property.

The new law also extends the required timeline to provide the nonrenewal notice before dropping a policyholder to 90 days, with additional extensions for people who are renovating their property to address the risk. The extended timeline will provide Californians with more time to fix their property in order to maintain their policy, or else provide a better opportunity to shop the open market for new coverage before they must resort to the FAIR Plan.

"California consumers should not have to live in fear that they'll be next to lose home insurance. SB 1301 gives families more notice before losing coverage and clear instructions on what it will take to stay insured. Consumers have a right to know the rules so they can act on them. These critical changes will help keep families home and stem the insurance crisis," said Carmen Balber, executive director of Consumer Watchdog. "We want to thank Senator Allen for carrying this important reform, lawmakers for supporting it, and the thousands of wildfire survivors, consumers and organizations who raised their voices to back insurance that works for everyone."

"Across California, the fear of losing home insurance has changed how people think about the security of their homes," said Joy Chen, Executive Director of Every Fire Survivor's Network. "For too long, consumers have held up our end of the bargain while having far too little power when an insurance company decides to walk away. SB 1301 begins to rebalance that relationship. This law says Californians deserve to be treated like customers, not liabilities to be shed. That matters for every family trying to build a secure future in this state."

SB 1301 additionally prohibits nonrenewals for reasons based solely on if the policyholder:

Inquired about an existing claim.

Filed a claim that is not payable or within their deductible.

Filed a claim that is not covered by their policy.

These consumer protections will take effect beginning January 1, 2028.