The California Department of Insurance (CDI) has mandated all property insurance providers to halt any pending non-renewals and cancellations for residential properties in affected areas in light of ongoing wildfires.
Earlier this month, wildfires erupted in several regions across California, with US President Biden approving a Major Disaster declaration for the state.
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The existing laws in California already offer protection to property owners impacted by wildfires.
These include a one-year moratorium on non-renewals or cancellations for properties within or adjacent to a fire perimeter following a state of emergency, based solely on the wildfire risk.
This prohibition encompasses all residential property insurance policies active during the declared emergency.
Insurance companies are now expected to immediately stop any pending non-renewals in the regions currently affected by wildfires.
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By GlobalDataFurthermore, after a total loss due to a declared disaster, insurers must offer policy renewal for at least two more years, providing a minimum of 24 months of coverage from the date of the loss.
The state also requires a 60-day grace period for insurance premium payments post a state of emergency, which insurers can extend if deemed reasonable.
Companies are urged to offer longer grace periods without discrimination and not based on the policyholder’s claims history.
For residential property owners outside the scope of these statutory protections but still facing non-renewal or cancellation due to the wildfires, the CDI is calling on insurers to voluntarily forego such actions.
This includes notices issued within the 90 days prior to 7 January 2025 but not due to take effect until after the wildfires began. Insurers are asked to pause these actions for at least six months from 7 January 2025 to aid communities in their recovery efforts.
Last month, California launched the Net Cost of Reinsurance in Ratemaking Regulation, requiring insurers to cover high-risk areas.
This regulation aims to enhance the resilience of the state’s insurance market against the challenges posed by wildfires and climate change.
