California Issues Moratorium on Insurers Non-Renewing or Cancelling Following Wildfires

California Insurance Commissioner Ricardo Lara on Thursday announced a mandatory one-year moratorium on insurance companies non-renewing or cancelling residential property insurance policies, a move he says is aimed at helping 2.1 million policyholders affected to date by the record 2020 wildfire season.

Lar’s action implements a California law that he authored in 2018 while serving as state senator to provide temporary relief from non-renewals to residents living within or adjacent to a declared wildfire disaster.

The announcement also affects nearly 364,000 policyholders who were included in last year’s moratorium, giving these particular policyholders an additional period of protection.

The moratorium order follows California Gov. Gavin Newsom’s emergency declarations giving protections for one year from those dates for residential insurance policies in ZIP codes within or adjacent to the fire perimeter.

Consumers can go to the California Department of Insurance website to see if their ZIP code is included in the moratorium. This is the second year Lara has implemented the 2018 moratorium law.

“Losing your insurance should be the last thing on someone’s mind after surviving a devastating fire,” Lara said in a statement. “My action gives millions of Californians breathing room and hits the pause button on insurance non-renewals while we take additional steps to expand our competitive market.”

The two largest insurance trade associations, the American Property Casualty Insurance Association, and the Personal Insurance Federation of California, issued a response to the moratorium on non-renewals, saying the move was anticipated.

“We agree with the Commissioner that this is a shared responsibility, which means everyone plays a part,” the joint statement reads. “We hope to work collaboratively on comprehensive solutions to better account for increased wildfire risk in homeowners coverage, which will increase availability of insurance.”

It continues:

“While changing the trajectory of climate change will take time, we need to take action now to make our communities more resilient and protect the lives and property of all Californians. This includes making sure homeowners have access to comprehensive insurance. It is important that we work together on solutions that increase insurance availability in high-fire risk areas and protect against insurer insolvency.”