New Insurance Protections for Wildfire Survivors

New insurance protections for wildfire survivors are now in effect for the summer wildfire season which increase payouts and evacuation benefits. Insurance Commissioner Ricardo Lara championed a new senate bill in the State Legislature.

“I listened to the uphill battles that wildfire survivors face in their efforts to recover and rebuild their lives and I took on the insurance companies,” said Commissioner Lara, whose Department of Insurance has held in-person meetings in 36 counties to listen to the needs of consumers. “These new insurance protections for wildfire survivors will mean larger payouts for some claims and less red tape from insurance companies.”

The sponsored Senate Bill 872, by commissioner Lara authored by Senator Bill Dodd and signed by Governor Gavin Newsom, will create new protections for wildfire survivors including:

• Insurance companies can no longer deduct the land value when paying an insurance claim if a wildfire survivor chooses to relocate rather than rebuild their home at the same location — which will lead to higher payouts for consumers. After recent major wildfires, some insurance companies refused to include the value of land when paying a total loss claim, reducing the total payout by tens to hundreds of thousands of dollars. This change gives homeowners more choices in whether to rebuild or relocate their new home.
• Residents under mandatory evacuation for wildfire, even if they suffer no damage to their home, will receive additional living expenses for at least two weeks, with extensions for good cause.
• Insurance companies cannot restrict additional living expenses if a home is rendered uninhabitable due to a wildfire or other covered peril, even if the damage is not to the property itself. This addresses the problems after recent major fires when insurance companies denied benefits even though damaged power and water lines made homes uninhabitable. An insurance company may provide a reasonable alternative remedy that addresses the property condition, such as a portable generator in the case of downed power lines or a portable water source.
• In cases of a total loss related to a state of emergency, insurance companies must provide an advance payment of no less than four months of additional living expenses if the consumer requests it, with additional benefits due after the advance period upon proper documentation.
• Wildfire survivors do not have to use a company-specific inventory form for lost contents and can include groupings of categories such as clothing, shoes, books, food items, and DVDs rather than having to list individual items.
• Insurance companies must offer a 60-day grace period on payment of policy premiums for properties located within the affected area defined in the declared state of emergency.

“An insurance policy is a contract – and my goal is to make sure insurance companies are holding up their end of the deal in the wake of a disaster so survivors get the benefits they deserve,” continued Commissioner Lara. “We want wildfire survivors to recover and rebuild as quickly as possible. We will continue to listen to the needs of California consumers and I will continue to work with the Legislature and Governor to act on their concerns.”

More than $200 million for wildfires survivors has been recovered from 2019 and 2020 by the Department of Insurance because of the investigation of consumer complaints. If you are a wildfire survivor, you can contact the Department of Insurance for your questions. Policy questions or claims, go to insurance.ca.gov or call 800-927-4357 (HELP)