New California Laws Help Protect Homeowners Affected by Fires and Natural Disasters

Longer periods in which to rebuild and more choice of how to apply insurance proceeds are among the features of new California insurance laws for 2019.

** LEGAL UPDATE **

The California legislature responded to homeowner fears and complaints about being improperly or unfairly denied insurance coverage after a wildfire or other natural disaster, as well as the increased threat of such disasters posed by climate change, by passing a total of eight new consumer protection laws for 2019.

The high points are summarized below.

Senate Bill 824 prohibits insurance companies from canceling or refusing to renew a homeowner’s insurance policy for one year after a state of emergency was declared, if the sole reason for cancellation was that the structure was within a wildfire area.

Senate Bill 894 requires insurers to, after a homeowner suffers a total loss owing to a fire or other disaster (and not just mere negligence), offer to renew the owner's policy for not just one year (as required under past law) but at least two renewal periods (24 months). Insurers must also grant up to 36 months of additional living expenses while the homeowner is unable to occupy the property (12 more months than before). And, insurers must allow homeowners to combine the policy limits for their primary dwelling and any other structures, and to use the combined amount as they see fit (for instance, apply it all to the main home).

Senate Bill 917 reaffirms existing law, which stops insurers from refusing to cover a loss resulting from a combination of disasters, such as a landslide, mudslide, mudflow or debris flow, if the proximate cause of the loss or damage falls under the homeowner's insurance coverage and thus would otherwise be grounds for collecting on.

Assembly Bill 1772 helps homeowners deal with the possibility of delays in rebuilding, for example due to a shortage of contractors or permit delays, by extending the period of time within which an homeowner can collect full replacement benefits under a replacement cost fire insurance policy; from 24 months to 36 months.

Assembly Bill 1800 allows homeowners who've suffered a total loss of their home to choose to rebuild or purchase an existing home at a new location, without worrying that the insurer will limit or deny payment on that basis.

Assembly Bill 2594 lengthens the existing statute of limitations for a homeowner to sue an insurer from 12 to 24 months, if the loss is related to a declared state of emergency.

Senate Bill 30 requires the California Insurance Commissioner to convene a working group in order to assess new investments in natural infrastructure and insurance products in light of the state's worsening fire vulnerability due to climate change.

Assembly Bill 1875 requires the California Department of Insurance to establish something called the California Home Insurance Finder on its website, as a way to connect consumers needing residential property insurance with agents and brokers.

Effective Date: January 1, 2019