The following information was released by the California Department of Insurance:
Commissioner Lara-sponsored laws enhance advance payouts for disaster survivors, prevent policy cancelations for businesses and non-profits following wildfire emergencies, and strengthen the FAIR Plan’s financial stability
SACRAMENTO, Calif. Today, Insurance Commissioner Ricardo Lara announced the signing of a legislative package inspired by the experiences of wildfire survivors. These new laws build on executive actions taken immediately after the wildfires, representing a comprehensive approach to enhancing consumer protections for homeowners across California.
“Protecting consumers from the growing threats of natural disasters and ensuring they have immediate access to resources during a crisis, free from obstacles from insurance companies, is vital,” said Commissioner Lara. “The Governor’s signature complements the executive actions I have implemented and strengthens our efforts to empower consumers. My Department will continue to advocate for homeowners, making it easier for them to prepare for and recover from wildfires.”
The three bills expanding protections for California homeowners are:
Eliminate “The List” Act (SB 495, authored by Senator Ben Allen): This bill requires insurance companies to pay 60 percent of contents coverage limits, capped at $350,000, to wildfire survivors who experience a total loss without needing to submit a detailed inventory list. It also grants consumers at least 100 days to provide proof of loss to their insurance company following a declared state of emergency. Furthermore, the proposal seeks to establish specific data collection authority to help the Department understand long-term trends in risk management and the integration of information related to climate-driven risks that significantly impact insurance availability.
The Business Insurance Protection Act (SB 547, jointly authored by Senators Sasha Renee Perez and Susan Rubio): The Wildfire Safety and Recovery Act of 2018 (SB 824, authored by then-Senator Lara) has protected millions of homeowners by prohibiting non-renewals of residential property insurance for one year. This proposal aims to extend this protection by broadening the insurance moratorium to include commercial policies, covering businesses, homeowners’ associations (HOAs), condominiums, affordable housing units, and non-profits.
“Holders of commercial insurance policies need and deserve reliable insurance during a disaster in same way that we already offer protections to residential policyholders,” said Senator Sasha Renee Perez. “Ensuring that the small businesses, non-profits, affordable housing providers, and other commercial insurance policyholders can trust their insurance coverage will remain intact after a disaster strikes is essential to a community’s recovery. I am deeply grateful to Governor Newsom for signing this important legislation and to Insurance Commissioner Lara for his steadfast partnership on this bill.”
The FAIR Plan Stability Act (AB 226, jointly authored by Assembly Members Lisa Calderon and David Alvarez): AB 226 seeks to enhance consumer safeguards by allowing the FAIR Plan, if authorized by the Commissioner, to access catastrophic bonds through the California Infrastructure and Economic Development Bank and enter into line of credit or loan agreements with one or more lenders. This provision would provide additional financial support for the state’s insurer of last resort, ensuring timely payment of consumer claims in the event of a major disaster.
These laws build on the executive actions Commissioner Lara took to expedite claims payments, protect businesses and non-profits from non-renewal, and stabilize the FAIR Plan. Following the L.A. wildfire outbreak on January 7, Commissioner Lara directed insurance companies to provide up-front payments and issued an insurance moratorium to protect homeowners from non-renewal. He also ensured that the FAIR Plan can continue paying claims while maintaining its financial stability.
“While we are reducing red tape and expanding protections after wildfire disasters, we must also focus on preventing destruction in the first place,” said Commissioner Lara, who has championed a comprehensive package of wildfire safety legislation building on his landmark Safer from Wildfires insurance discounts. “I thank Governor Newsom and legislative leaders for recognizing the importance of my Department’s ongoing efforts to enhance consumer protections for Californians.”
###
Led by Insurance Commissioner Ricardo Lara, the California Department of Insurance is the consumer protection agency for the nation’s largest insurance marketplace and safeguards all of the state’s consumers by fairly regulating the insurance industry. Under the Commissioner’s direction, the Department uses its authority to protect Californians from insurance rates that are excessive, inadequate, or unfairly discriminatory, oversee insurer solvency to pay claims, set standards for agents and broker licensing, perform market conduct reviews of insurance companies, resolve consumer complaints, and investigate and prosecute insurance fraud.
Based in New York, Stephen Freeman is a Senior Editor at Trending Insurance News. Previously he has worked for Forbes and The Huffington Post. Steven is a graduate of Risk Management at the University of New York.