California has approved a package of new laws meant to stabilize the state\u2019s faltering home insurance market and help property owners protect their homes from wildfires and recover when they lose everything in a blaze.<\/p>\n
The legislation, signed by Gov. Gavin Newsom this month, is the state\u2019s latest effort to tackle an insurance crisis that\u2019s left thousands of homeowners facing steep rate hikes, canceled coverage and long delays securing claim payments.<\/p>\n
Despite a recent plan to overhaul California\u2019s strict insurance regulations in hopes of persuading carriers to expand coverage in fire-risk areas, many homeowners have yet to see any immediate changes<\/a>.<\/p>\n While the latest laws are only incremental steps toward fixing the crisis, they aim to provide some homeowners meaningful relief. Here are three of the most potentially impactful reforms:<\/p>\n Fire-safe grants for homeowners<\/p>\n Assembly Bill 888\u00a0establishes a grant program<\/a> to help low- and middle-income homeowners pay for wildfire defense measures such as installing fire-resistant roofs and clearing flammable vegetation from their properties \u2014 improvements that can cost thousands or even tens of thousands of dollars, but qualify for insurance premium discounts.<\/p>\n It will now be up to state lawmakers to determine how much grant money individual homeowners could receive. Cities and counties will also be able to apply for the grants for fire mitigation programs to make communities safer and potentially more insurable.<\/p>\n For a homeowner to be eligible for the money, their property would need to be insured by a state-approved provider and in a ZIP code that overlaps with a \u201chigh\u201d or \u201cvery high\u201d fire risk zone, as listed by CalFire<\/a>.\u00a0That includes wide swaths of most Bay Area counties.<\/p>\n A property owner\u2019s earnings would need to be within the low-income limit for their county, as defined by the state housing department. That definition is broad, however. In Santa Clara County, for example, a family of four earning up to $159,550 a year would qualify as low-income and be eligible.<\/p>\n The bipartisan bill, authored by Assemblymember Lisa Calderon, a Democrat representing Los Angeles County, follows an executive order by Newsom earlier this year to require many homeowners to create a 5-foot \u201cember-resistant\u201d zone<\/a> around their houses. Newsom ordered state officials to finalize the \u201cZone Zero\u201d rules by the end of the year.<\/p>\n Higher minimum payout for wildfire claims<\/p>\n When a home is completely destroyed in a blaze, insurers will soon be required to pay out at least 60% of an owner\u2019s personal property coverage limit \u2014 up to $350,000 \u2014 even before receiving a complete list of destroyed household items such as appliances, electronics and jewelry.<\/p>\n Previously, insurers only had to advance 30% of coverage, capped at $250,000. Senate Bill 495, authored by Sen. Ben Allen, a Democrat from Los Angeles, will go into effect next year.<\/p>\n Allen introduced the bill after learning about the struggles some homeowners faced in cataloging their lost items to secure insurance payouts after their properties were destroyed\u00a0in the Los Angeles wildfires in January<\/a>.<\/p>\n \u201cThe recent LA Fires exposed difficult inefficiencies in our insurance system that unnecessarily delay the urgently needed financial support survivors are justly due,\u201d Allen said in a statement.<\/p>\n Additionally, the law grants property owners 100 days to provide insurers with proof of property damage following a declared state of emergency.<\/p>\n Insurers initially pushed back on the bill, but industry groups dropped their opposition after lawmakers agreed to lower the advance payment requirement from 100% to 60%.<\/p>\n \u201cYou would have had massive, massive payouts that would be unjustified,\u201d said Seren Taylor, vice president for the Personal Insurance Federation of California.<\/p>\n Stabilizing the FAIR Plan<\/p>\n