California: Home insurance cancellation moratorium in fire-prone areas

California: Home insurance cancellation moratorium in fire-prone areas

California Insurance Commissioner Ricardo Lara has issued a moratorium on canceling or non-renewing home insurance policies in the Pacific Palisades and Eaton fires in the San Gabriel Valley.

The moratorium, issued Thursday, protects homeowners living within the fire perimeter and neighboring zip codes from losing their insurance policies for one year, starting after Gov. Gavin Newsom declared a state of emergency on Wednesday.

State law mandates that moratoriums be issued after major wildfires. These moratoriums apply to all policyholders regardless of whether they suffered a loss.

Lara also urged insurers to suspend for six months any outstanding non-renewals or cancellations issued 90 days before Jan. 7 that were set to go into effect after the fires — something he has no authority to block.

“I call on all property insurance companies to halt these non-renewals and cancellations and provide essential stability to our communities, allowing consumers to focus on what matters most right now — their safety and recovery,” Lara said Friday during a news conference in downtown Los Angeles.

California insurers have broad leeway not to renew homeowners’ policies after they expire, though they must provide at least 75 days’ notice. Existing policies can only be canceled for nonpayment and fraud.

Insurers have recently dropped hundreds of thousands of policyholders across California, citing the increased risk and severity of wind-driven wildfires attributed to climate change. The insurance department said residents in fire-prone areas could be subject to sudden non-renewals, prompting a temporary insurance moratorium.

Additionally, Lara asked insurers to extend the grace period for policyholders affected by the fires to pay their premiums beyond the current 60 days required by state law.

It’s unclear how many homeowners in Pacific Palisades and elsewhere may not have had coverage, but several reported that their insurance companies had not renewed their policies before the disaster struck. State Farm told the insurance department last year that it would not renew 1,626 policies in Pacific Palisades when they expired, starting in July.

Residents can visit the insurance department’s website at insurance.ca.gov to see if their ZIP codes are included in the temporary insurance moratorium. They can also contact the department at (800) 927-4357 or via chat or email if they believe their insurance company is violating the law.

The Pacific Palisades Fire, the most destructive blaze in Los Angeles history, had burned over 20,000 acres by Friday morning and more than 5,000 homes, businesses, and other structures. The fire is 6 percent contained.

The Eaton Fire, which has burned several buildings in Altadena and Pasadena, has grown to nearly 14,000 acres and was 3 percent contained as of Friday morning. Ten people have died in the fires.