Firefighters work to contain wildfires near Eaton Canyon in California on Thursday, January 9, 2025. Photo: Amanda Bronstad/ALM.
Proposed legislation in California is expected to provide swifter claims payments for wildfire survivors, according to the state’s insurance commissioner Ricardo Lara.
Lara and newly-appointed Senate Insurance Committee Chair Steve Padilla announced Senate Bill 876 on Tuesday Jan. 6, a comprehensive legislative reform to speed up disaster recovery for homeowners and renters through improved insurance coverage and expanded consumer protections.
“Families are navigating loss, claims and uncertainty,” said Lara. “There is real fear, frustration and misinformation right now with the pace of recovery.”
“We will measure success when people can recover without red tape and delays, get coverage on their own terms and rebuild so they are out of harm’s way in the future,” he added. “While our focus is on insurance, recovery is multifaceted, not one-dimensional. Federal, state, local and private coordination is required for a successful recovery.”
The payment of insurance claims from insurance companies for the Los Angeles wildfires is already the fastest on record, according to Commissioner Lara’s office, with $22.4 billion distributed since January 2025, along with $6 billion in federal, state, local, and private donations committed.
Meanwhile, the Department’s latest data shows 94% of 42,121 policyholder claims filed have been fully or partially paid, with $183 million returned through Department investigations.
The Disaster Recovery Reform Act, authored by Senator Padilla, aims to cut red tape, improve payouts, and end delays and runarounds by insurance companies.
- Requiring a “disaster recovery plan” from insurers for handling claims and meeting timelines — reviewed by the Department in advance and put into effect in an emergency situation.
- Doubling penalties during a declared emergency for violations of insurance fair claims practices and settlement law.
- Requiring insurance companies pay restitution directly to policyholders when they violate the law.
- Addressing delays resulting from the assigning of multiple adjusters by requiring insurance company status reports to policyholders within five days anytime a new adjuster is assigned.
- Improving recovery by expanding policy limits for Additional Living Expenses by 100% in a declared disaster.
- Expanding up-front payments by requiring Actual Cash Value and structure replacement cost be paid quickly following a total loss, with interest payable if late.
- Providing adequate recovery funds by requiring a mandatory offer of extended and guaranteed replacement cost coverage when writing a policy, and regular updated replacement cost estimates for new business and renewals.
- Safer rebuilding by applying mandatory building code upgrade coverage at the time of rebuild — not at the time of loss — to account for updated rules.
“The last 12 months have made clear the urgent need to update and modernize the claims process to better protect homeowners devastated by these wildfires,” said Senator Steve Padilla. “Homeowners deserve better and our laws need to better protect them to ensure they are compensated in a timely way and not subjected to a maze of roadblocks by insurers.”
(Photo: Amanda Bronstad/ALM)
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