New California laws aim to ease ongoing home insurance crisis
The legislation, signed by Gov.
Despite a recent plan to overhaul California’s strict insurance regulations in hopes of persuading carriers to expand coverage in fire-risk areas, many homeowners have yet to see any immediate changes.
While the latest laws are only incremental steps toward fixing the crisis, they aim to provide some homeowners meaningful relief. Here are three of the most potentially impactful reforms:
Fire-safe grants for homeowners
Assembly Bill 888 establishes a grant program to help low- and middle-income homeowners pay for wildfire defense measures such as installing fire-resistant roofs and clearing flammable vegetation from their properties — improvements that can cost thousands or even tens of thousands of dollars, but qualify for insurance premium discounts.
It will now be up to state lawmakers to determine how much grant money individual homeowners could receive. Cities and counties will also be able to apply for the grants for fire mitigation programs to make communities safer and potentially more insurable.
For a homeowner to be eligible for the money, their property would need to be insured by a state-approved provider and in a ZIP code that overlaps with a “high” or “very high” fire risk zone, as listed by CalFire. That includes wide swaths of most
A property owner’s earnings would need to be within the low-income limit for their county, as defined by the state housing department. That definition is broad, however. In
The bipartisan bill, authored by Assemblymember
Higher minimum payout for wildfire claims
When a home is completely destroyed in a blaze, insurers will soon be required to pay out at least 60% of an owner’s personal property coverage limit — up to
Previously, insurers only had to advance 30% of coverage, capped at
Allen introduced the bill after learning about the struggles some homeowners faced in cataloging their lost items to secure insurance payouts after their properties were destroyed in the
“The recent LA Fires exposed difficult inefficiencies in our insurance system that unnecessarily delay the urgently needed financial support survivors are justly due,” Allen said in a statement.
Additionally, the law grants property owners 100 days to provide insurers with proof of property damage following a declared state of emergency.
Insurers initially pushed back on the bill, but industry groups dropped their opposition after lawmakers agreed to lower the advance payment requirement from 100% to 60%.
“You would have had massive, massive payouts that would be unjustified,” said
Stabilizing the FAIR Plan
Assembly Bill 226 aims to ensure the FAIR Plan, the state’s last-resort insurance program, doesn’t run out of money after a catastrophic blaze.
The FAIR Plan is a state-created, privately managed insurance pool for homeowners who can’t find traditional coverage because their properties are deemed too risky. As worsening climate-driven wildfire seasons have scorched the state in recent years, the number of homeowners forced onto the plan’s expensive, bare-bones coverage has surged to almost 600,000.
Last year, FAIR Plan officials warned the program could become insolvent following a major wildfire. Then, after the
The new law, which passed with near-unanimous support from
“The kinds of climate-fueled firestorms like we saw in January will only continue to worsen over time,” Newsom said in a statement. “That’s why we’re taking action now to continue strengthening California’s insurance market to be more resilient in the face of the climate crisis.”
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