CA Insurance Commissioner Issues Mandatory Moratorium on Non-Renewals After Recent Wildfire Activity

By on January 21, 2020

Yucaipa residents faced with non-renewal notices of their homeowner’s insurance should find some much needed relief.  Insurance Commissioner Ricardo Lara issued a mandatory one-year moratorium on insurance companies non-renewing policyholders–helping at least 800,000 homes in wildfire disaster areas.

The commissioner’s action is the result of Senate Bill 824 — authored last year by Lara while serving as state senator — in order to give temporary relief from non-renewals to residents living near a declared wildfire disaster.

Many communities across the state are finding it difficult to find affordable comprehensive fire insurance. So difficult that real estate transactions have stalled or been cancelled.  In August of 2019, the Department of Insurance published data that showed an increasing trend of non-renewals for people in high-risk areas for wildfires.

After meeting with many of the affected communities and policyholders over the last year, Insurance Commissioner Ricardo Lara issued a bulletin to notify all residential property insurance providers in California that “An insurer shall not cancel or refuse to renew a policy of residential property insurance for a property located in any ZIP Code within or adjacent to the fire perimeter, for one year after the declaration of a state of emergency, based solely on the fact that the insured structure is located in an area in which a wildfire has occurred. This prohibition applies to all policies of residential property insurance in effect at the time of the declared emergency.”

“This wildfire insurance crisis has been years in the making, but it is an emergency we must deal with now if we are going to keep the California dream of home ownership from becoming the California nightmare, as an increasing number of homeowners struggle to find coverage,” said Commissioner Lara. “I am calling on insurance companies to push the pause button on issuing non-renewals for one year to give breathing room to communities and homeowners while they adapt and mitigate risks, give the Legislature time to work on additional lasting solutions, and allow California’s insurance market to stabilize.”

On October 11, 2019, Governor Gavin Newsom declared a state of emergency for Los Angeles and Riverside Counties due to the Saddleridge Fire in Los Angeles County, and the Eagle Fire, Sandalwood Fire, Reche Fire, and Wolf Fire in Riverside County.

Therefore, due to the Governor’s Declaration, no insurer shall cancel or non-renew policies of residential property insurance due to wildfire risk for one year. In addition, all insurance companies writing residential property insurance in the state of California must offer to rescind any notices of cancellation or non-renewal issued since the Governor’s October 2019 Declaration, and offer to reinstate or renew the policies in place at the time of Declaration, if any such notices of cancellation or nonrenewal were issued on or after the date of the Declaration, were due to wildfire risk, and the properties are located in ZIP Codes identified in the notice issued by the Commissioner.

The California Department of Insurance, established in 1868, is the largest consumer protection agency in California. Insurers collect $310 billion in premiums annually in California. Please visit the Department of Insurance website at www.insurance.ca.gov. Non-media inquiries should be directed to the Consumer Hotline at 800-927-4357. Teletypewriter (TTY), please dial 800-482-4833.