Daily P&C Insurance News
California Edition

Senate Bill 876, the Disaster Recovery Reform Act, requires insurers to submit disaster recovery plans for claims handling and doubles penalties for fair claims violations during emergencies. It expands policy limits for living expenses, mandates quick up-front payments for total losses, and offers extended replacement cost coverage to aid wildfire survivors.

California home insurance premiums are projected to rise 20% or more by end-2025 due to reinsurance cost surges, wildfire losses, and new rules allowing catastrophe models in rates. Recent wet weather in Southern California may further increase flood and mudslide risks, leading to higher surcharges, deductibles, and non-renewals in vulnerable areas.

The California Department of Insurance released its annual guide outlining key laws and timelines for property claims during disasters like wildfires, including advance payments for living expenses and extended periods to collect full replacement costs. It covers grace periods for premiums, proof of loss requirements, and special provisions triggered by states of emergency.

Insurance Commissioner Ricardo Lara approved a 6.9% rate increase for Mercury Insurance and CSAA over the holidays amid ongoing market challenges. The opinion piece criticizes private insurers’ practices as they limit coverage in high-risk areas, leaving homeowners reliant on the strained FAIR Plan.

California’s property insurance market faced collapse risks well before 2025 wildfires due to non-renewals, reinsurance pressures, and regulatory hurdles. The review highlights Commissioner Lara’s reforms allowing catastrophe modeling and rate adjustments as steps toward stabilization, though challenges persist.