California’s insurance commissioner, Ricardo Lara, issued a one-year moratorium on non-renewals and cancellations in areas affected by the state’s fires.
“I am using my moratorium powers to prevent insurance companies from canceling or non-renewing policies in wildfire-impacted areas, so people don’t face the added stress of finding new insurance during this horrific event,” he said in a statement. “I am working on all fronts to make sure wildfire victims get the benefits they are entitled to, and they get it as soon as possible.”
The moratorium applies to ZIP codes within or near the perimeter of the Palisades and Eaton fires.
“This pause on non-renewing and canceling policies would last six months as impacted communities begin the recovery process,” a press release on the matter explains. “In addition, Commissioner Lara called on insurers to offer beyond the 60-day grace period under existing law for policyholders in the immediate affected wildfire areas, to pay their home insurance premiums given the challenges that many policyholders in these areas are having right now.”
The moratorium includes non-renewals issued three months prior to January 7, when Governor Gavin Newsom (D) declared a state of emergency for the fires.
State Farm announced in March 2024 that it would not renew the coverage of 72,000 home and apartment policies. About 1,600 homes in the Pacific Palisades were dropped by State Farm in July, according to reports.
“This decision was not made lightly and only after careful analysis of State Farm General’s financial health, which continues to be impacted by inflation, catastrophe exposure, reinsurance costs, and the limitations of working within decades-old insurance regulations,” State Farm said in its announcement of the non-renewals. “State Farm General takes seriously our responsibility to maintain adequate claims-paying capacity for our customers and to comply with applicable financial solvency laws. It is necessary to take these actions now.”
State Farm says of its “catastrophe exposure” that “[i]n recent years, the number of acres burned in California has been increasing, and more people are moving into areas prone to fires. This means that when extreme weather events like wildfires happen, the damage can be more costly due to the higher number of people, homes and businesses at risk.”
