The California Department of Insurance (CDI) recently instructed all property insurance companies to hold off on any pending non-renewals and cancellations for homes located in areas affected by the ongoing wildfires. These wildfires began spreading across California earlier this month, prompting President Biden to declare a Major Disaster for the state.
California law already offers some level of protection to homeowners affected by these wildfires. For instance, there’s a one-year ban on non-renewals or cancellations for properties situated within or near a fire perimeter once a state of emergency is declared. This moratorium is specifically in place to address the risk posed by wildfires.
This protective measure applies to all residential property insurance policies active during the emergency declaration. Insurance firms are now obligated to immediately freeze any pending non-renewals in wildfire-affected regions. Additionally, if someone experiences a total loss due to a proclaimed disaster, insurers are required to renew their policy for at least two years, providing a minimum of 24 months of coverage from the date of the incident.
Moreover, the state mandates a 60-day grace period for premium payments following a state of emergency, which insurers can extend on a reasonable basis. Insurers are encouraged to extend this grace period impartially, regardless of the policyholder’s claims history.
For homeowners who aren’t directly covered by these statutory protections but still face non-renewal or cancellations due to the wildfires, the CDI is urging insurers to voluntarily refrain from these actions. This appeal extends to notices issued within the 90 days before January 7, 2025, which weren’t scheduled to take effect until after the wildfires started. Insurers are asked to pause these actions for at least six months from January 7, 2025, to support community recovery efforts.
In addition, last month California introduced the Net Cost of Reinsurance in Ratemaking Regulation, requiring insurers to provide coverage in high-risk areas. This regulation is designed to fortify the state’s insurance market against the increasing challenges posed by wildfires and climate change.
Life Insurance International, a brand owned by GlobalData, originally created and published the article titled “California halts insurance non-renewals in wildfire areas.”
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