Governor Gavin Newsom recently signed several wildfire insurance reforms into law, alongside measures offering mortgage relief to victims of the January 2025 wildfires in Los Angeles County and other state disasters. However, the Governor also vetoed two bills designed to address specific claims-handling complaints from those impacted by the 2025 fires.
Among the legislation signed was the Disaster Recovery Reform Act, Senate Bill 876, by Senator Steve Padilla (D-San Diego), which was sponsored by Insurance Commissioner Ricardo Lara. This bill will increase penalties during a declared emergency for violations of fair claims practices. It also requires insurers to provide direct restitution to policyholders when engaging in unfair settlement practices and mandates timely status reports whenever an insurer changes adjusters, among other provisions. Senator Padilla stated that "When disaster strikes, families shouldn’t have to face a second disaster in the claims process." He added that SB 876 aims to modernize existing laws.
Another significant bill signed into law was Senate Bill 1301, authored by Senator Benjamin Allen (D-Santa Monica). This legislation requires insurers to provide clear reasons for not renewing a homeowner policy and generally necessitates a 90-day notice of such a decision. It also provides homeowners with an opportunity to remedy any issues that might lead to non-renewal. The American Property Casualty Insurance Association, a prominent industry trade group, voiced support for this non-renewal bill. Mark Sektnan, Vice President of state government relations for the group, noted that these provisions are expected to help policyholders maintain coverage and better understand an insurer's decision to nonrenew a policy.
Conversely, Governor Newsom vetoed two bills introduced by Senator Sasha Renée Pérez (D-Pasadena). These bills specifically targeted claims-handling issues brought to light by the January 2025 wildfires, particularly impacting residents in the Eaton fire zone. Both bills had garnered bipartisan support in the legislature and faced no opposition from the insurance industry. Notably, SB 878 was co-sponsored by Commissioner Lara as part of a reform package that included Padilla’s bill.
Senate Bill 877 would have required insurers to provide homeowners with the original loss estimates prepared by company adjusters, along with any subsequent revisions. This measure was intended to address widespread complaints from fire victims that initial loss estimates, prepared by adjusters who visited their properties, were later reduced by adjusters who had not physically inspected the sites.
The other vetoed bill, Senate Bill 878, would have mandated insurers to respond to claims in writing and to pay them within 30 days, including for total losses. Failure to do so would have resulted in the accrual of interest. January wildfire victims had complained of significant delays in receiving their claim payments.
In his letter to the Senate explaining the vetoes, Governor Newsom stated that the bills would "codify portions of existing, unrelated regulations that are unnecessary at this time." This reasoning has been disputed by Carmen Balber, executive director of Consumer Watchdog, a Los Angeles advocacy group that co-sponsored both vetoed bills. Balber asserted that there is nothing in the state’s insurance code requiring insurers to provide policyholders with revised loss estimates, and that existing regulations regarding interest penalties for late payments are "toothless." She pointed out that "L.A. fire survivors experience shows that insurance companies don’t have to deny your claims payments. They only have to delay them."
Senator Pérez also issued a statement, expressing that the vetoes will compel fire victims to "wait for accountability and justice." She affirmed her commitment to continue working with fire survivors to aid in their recovery and to author legislation addressing the needs of disaster survivors across California.
Separately, a California judge recently turned down a petition seeking to halt surcharges that home insurers have been levying statewide on policyholders. These surcharges are intended to cover costs related to the January 2025 wildfires in L.A. County.
