California forces property insurers to offer cover in danger zone

California is set to prohibit insurers to cancel or refuse to renew a policy based solely on the fact that the insured structure is located in the area of a declared state of emergency and forces insurers to hand over fire-related data to authorities.

Senate Bill 824 which aims to strengthen consumer protections for wildfire survivors has passed the legislature and is headed to California governor Jerry Brown.

The bill provides “valuable information to the California Department of Insurance (CDI) related to fire risk information on the residential property policies issued by insurers,” according to an official statement.

"As extreme wildfire risk grows, data from insurers detailing and documenting this risk has not kept pace," said Insurance Commissioner Dave Jones.

"Requiring insurers to provide wildfire risk data will give the Department of Insurance an important additional tool to help protect the 3.6 million Californians living in the Wildland Urban Interface. This data should help Californians living in high-risk areas access insurance products protecting their homes and communities," Jones added.

Wildfires are increasing in frequency and severity and currently CDI lacks the data to fully understand the impact of wildfire risk on both the availability and affordability of homeowner's insurance in order to help homeowners, the statement said. SB 824 will allow CDI to gain information to better help homeowners and ensure a vibrant and robust insurer marketplace relating to fire risk, it added.

"'Will I still have insurance?' is not a question homeowners should have to face immediately after a wildfire disaster," said Senator Ricardo Lara (D-Bell Gardens). "If this bill becomes law, millions of Californians living in the wildland urban interface will have greater security. Insurers will not be able to hide behind increased fire risk when they cancel or non-renew insurance within a year of a catastrophic fire, and SB 824 will help us protect communities."

SB 824 will lead to the collection of data that will provide a more comprehensive picture of the changes in our marketplace. The availability of this data will allow insurers to utilize aggregated information that should help them write more policies in the Wildland Urban Interface without overextending their risk profile, according to the statement.

Many homeowners in high risk counties are being non-renewed by their insurer, the statement noted. Many insurers are not writing insurance for some homes they determine to be at high risk of wildfire, it continued. “Some homeowners chose to not renew their policies because of steep premium increases and/or lower coverage reasons. SB 824 also prohibits insurance companies from cancelling or non-renewing any homeowner policies within and immediately surrounding a declared emergency area for one year - extending current protections for those who experience total loss to add consumers whose homes survive the blaze,” the statement said.

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