California insurance consumer laws take effect, with more proposed

As seven new laws regarding wildfire insurance claims and insurance industry issues and practices took effect in California on January 1, more may be on the way.

State insurance commissioner Ricardo Lara and state senator Steve Padilla, who chairs the Senate's insurance committee, have introduced SB 876, the Disaster Recovery Reform Act. 

State senators Sasha Renee Pérez and Benjamin Allen have introduced SB 877, the Fair Claims Practices and Transparency Act, and SB 878, the Insurance Payment Accountability Act.

Padilla's bill promises to speed up disaster recovery for homeowners and renters through improved insurance coverage and expanded consumer protections. In a press release, Padilla and Lara call the bill a response to wildfire survivors' call for faster claims payments and to stop delays and runarounds by insurers.

SB 877 would require transparency and accountability in loss estimates, showing how payouts are calculated, what changes were made, by whom and why, so that policyholders can challenge errors or inaccuracies in claims handling. SB 878 would impose interest penalties on insurers that delay claims payments, particularly when undisputed amounts are not paid within 30 days. The legislation is a response to evidence of insurers' adjusters issuing guidance to avoid decisions and prolong claims, to bypass prompt-payment rules that already exist.

On January 1, seven new laws regarding wildfire safety and insurance consumer protection took effect.

• The California Safe Homes Act (AB 888) authorizes grants to help residents get fire-safe roofs and mitigate fire risks within five feet of their homes. 

• The California Wildfire Public Model Act (SB 429) authorizes the state to create a publicly available wildfire catastrophe risk model

• The Insurance and Wildfire Safety Act (AB 1) requires regular reviews of qualifications for insurance discounts for wildfire prevention.

• Eliminate "The List" Act (SB 495) requires insurers to pay 60 percent of contents coverage limits, capped at $350,000, to wildfire survivors whose homes are a total loss, without detailed inventory lists.

• The Business Insurance Protection Act (SB 547) extends previously enacted protection for residential property policyholders against non-renewals, to also apply for commercial properties.

• The FAIR Plan Stability Act (AB 226) authorizes issuance of bonds to fund the FAIR Plan, the state's property insurer of last resort.

• Annual Insurance Omnibus (AB 487) clarifies existing insurance laws and removes outdated provisions.
  

In addition, Consumer Watchdog's suit against the California Department of Insurance to block an assessment against FAIR Plan policyholders to cover losses from the January 2025 wildfires, will not have a hearing in Los Angeles Superior Court until June 30, according to the advocacy group.