California Insurance Commissioner Announces Moratorium on Cancellations and Non-Renewals for Residential Property Insurance Amid Southern California Wildfires
On January 9, 2025, Insurance Commissioner Ricardo Lara issued an official notice urging insurers to temporarily halt cancellations and non-renewals of residential property insurance policies for properties affected by the recent wildfires in Southern California. This action is in response to the widespread destruction caused by the fires, including the Palisades Fire, Eaton Fire, and Tyler Fire, which have left many residents struggling with evacuation and recovery efforts.
Key Measures to Protect Homeowners:
Moratorium on Cancellations and Non-RenewalsAs part of California's ongoing efforts to support wildfire-impacted homeowners, Insurance Commissioner Lara has mandated that insurers must cease pending cancellations and non-renewals for residential properties located within or around the fire-affected areas. This moratorium is in effect for at least one year after the declaration of a state of emergency, as outlined in California Insurance Code Section 675.1(b)(1).
60-Day Grace Period for Premium PaymentsIn recognition of the hardships faced by homeowners in the wake of these fires, insurers are required to extend a 60-day grace period for premium payments for policies in the affected areas. This grace period aims to relieve financial pressure on property owners during this challenging time. Insurance companies are encouraged to offer even longer grace periods where possible, as long as they do so equitably and without considering the policyholder's claims history.
Protections for Policyholders After Total LossesIn cases where a residential property has sustained total loss due to a declared disaster, insurers are required to offer policy renewals for at least two additional annual periods, providing stability for affected homeowners during their recovery process (Cal. Ins. Code section 675.1[a][3]).
Pause on Pending Non-Renewals and CancellationsThe notice also calls for insurance companies to halt any pending non-renewals or cancellations scheduled to take effect on or after January 7, 2025. This includes policies where the insurer had issued notices of non-renewal or cancellation within the previous 90 days. By postponing these actions for six months, the goal is to help communities focus on rebuilding without the added burden of losing coverage during the recovery period.
Further Guidance for Insurers and PolicyholdersInsurance companies are reminded of their obligations under California law to ensure that all relevant staff and claims adjusters are familiar with the protections available to policyholders affected by declared disasters. This includes offering extended timeframes for claims related to replacement costs, additional living expenses, and other benefits triggered by the wildfire disaster.
For more information or inquiries about this notice, policyholders and insurers can reach out to Jully Pae at the California Department of Insurance at Jully.Pae@insurance.ca.gov.
For the full text of the notice and related documents, you can visit these resources:
This proactive measure from Insurance Commissioner Lara aims to ensure that California residents affected by the devastating wildfires can focus on recovery without the additional concern of losing their property insurance coverage.
Comments