When California was hit by a scorching heat wave in late August and early September 2022, the parched conditions turned a small fire in Los Angeles County into a massive blaze that destroyed hundreds of homes and more than 5,000 acres of land. Gov. Gavin Newsom responded to the developing crisis on Nov. 19 by declaring a state of emergency. The declaration made sure that Newsom’s administration had the resources it needed to fight what became known as the Route Fire and help local residents, and it also made sure that insurance companies would not cancel or refuse to renew homeowner’s policies in the affected area.
Senate Bill 824
That is because of Senate Bill 824. When Insurance Commissioner Ricardo Lara was a state senator, he authored the bill to impose a mandatory one-year moratorium on non-renewing or canceling homeowner’s insurance policies after the governor declares a state of emergency because of a wildfire. After a declaration is made, the Governor’s Office of Emergency Services works with fire officials to identify the zip codes where the moratorium will be enforced. The insurance law gives property owners who suffer no loss or less than a total loss in a wildfire the same kind of legal protection available to homeowner’s who suffer total losses.
The Route Fire
Senate Bill 824 has been implemented every year since its passage in 2018. In November 2022, it was implemented for the fourth time after Gov. Newsom’s declaration of a state of emergency in response to the Route Fire. A bulletin sent by the California Department of Insurance orders insurance providers in the state not to cancel or refuse to renew homeowner’s policies in 11 Los Angeles and Kern County zip codes for one full year.
A worryingly necessary law
Insurance companies cancelling policies over fears about future claims is nothing new, but to take this kind of action against loyal customers who could lose everything in a fire is ruthless even by the standards of the financial sector. Laws like Senate Bill 824 would not be needed in a world where businesses operated with a modicum of decency, but that is not always the case.