California Insurance Commissioner Ricardo Lara has recently issued a critical moratorium that bars insurers from canceling or non-renewing home insurance policies in the fire zones of Pacific Palisades and Eaton in the San Gabriel Valley. This moratorium aims to provide homeowners with a measure of stability as they struggle to overcome the aftermath of devastating wildfires.
The moratorium, announced on January 9, 2025, ensures protection for policyholders within the fire perimeters and adjoining ZIP codes for one year. It is retroactively effective from January 8, 2025, the date Governor Gavin Newsom declared a state of emergency.
Protections Extend Beyond Immediate Losses
Under California state law, these moratoriums are standard practice following significant fires and apply to all homeowners in the affected areas, regardless of whether their property suffered damage. Commissioner Lara has also urged insurers to voluntarily halt any non-renewals or cancellations issued within 90 days before January 7, which were set to take effect after the fires began.
“I call upon all property insurance companies to halt these non-renewals and cancellations and provide essential stability for our communities, allowing consumers to focus on what’s important at the moment—their safety and recovery,” Lara emphasized during a press conference on January 10, in downtown Los Angeles.
Despite this call to action, Lara noted that he lacks the authority to mandate such delays, leaving it to the discretion of insurers.
Scope of the Crisis
The Pacific Palisades fire, now the most destructive in Los Angeles’ history, has consumed over 20,000 acres. More than 5,000 structures have been destroyed by the fire, which has claimed ten lives. By the morning of January 10, the blaze was only 6% contained.
The Eaton fire has ravaged nearly 14,000 acres across Altadena and Pasadena, destroying numerous buildings and further exacerbating the crisis. It remained just 3% contained as of January 10.
Sudden non-renewals of insurance for so many homeowners in fire-prone zones have emerged as a mounting challenge. Last year, State Farm filed for the cancellation of 1,626 policies in Pacific Palisades due to the increasing risk of exposure to climate change-induced wildfires.
Industry Responds to Devastation
Denni Ritter, a vice president at the American Property Casualty Insurance Association, acknowledged the severity of the situation stating, “The American Property Casualty Insurance Association is heartbroken by the tragic loss of lives, homes and personal property caused by the devastating fires in Southern California. Insurers remain steadfast in their commitment to their customers and the state.”
Ritter also highlighted the industry’s focus on ensuring safety and facilitating swift recovery efforts for affected residents.
Additional Measures for Homeowners
The Department of Insurance has also called on insurers to extend the grace period for premium payment beyond the 60-day minimum required by state law. This request, if granted, will ease the financial burden on policyholders who are struggling to rebuild their lives.
For homeowners affected by the fires, the department provides resources to verify if their ZIP codes fall within the moratorium’s coverage. Residents can visit the Department of Insurance website at insurance.ca.gov or contact the department directly at (800) 927-4357.
A Year of Stability Amid Rising Risks
Homeowners in California, especially in fire-prone zones, have battled insurance challenges. Insurers hold the authority to not renew policies with at least 75 days’ prior notice. However, policies already in force can only be canceled for specific reasons such as non-payment or fraud.
The moratorium seeks to address these challenges to ensure that homeowners grappling with fire-related devastation are not further destabilized by the loss of insurance coverage.
The Road Ahead
As the fires continue to rage, Commissioner Lara’s moratorium provides a crucial shield for residents against insurance-related vulnerabilities. While challenges persist, this action reflects the state’s commitment to supporting its communities through recovery.
By fostering cooperation between insurers, policymakers, and residents, California aims to rebuild stronger and better equipped to weather the escalating threats posed by climate change.
