In his latest Notice No. 2025-01 on January 9, 2025, California Department of Insurance Commissioner Ricardo Lara issued a minimum six-months pause on all pending property insurance cancellations and non-renewals that were issued within 90 days prior to January 7, 2025 where those cancellations and non-renewals would become effective after January 7, 2025. Effectively, this means that policyholders who were set to lose their insurance coverage when the fires erupted may be able to have such coverage reinstated for a bit longer.
I’m calling on all property insurance companies to forego any pending nonrenewals and cancellations that are due to take effect on residential properties located within and around these wildfires. Pending nonrenewals and cancellations would include notices that were sent from the insurance company to the policyholder in the previous ninety (90) days prior to January 7, 2025, but were not due to take effect until after the start of the January 7, 2025 wildfires. I am calling on all property insurance companies to pause these pending nonrenewals and cancellations for at least six months from January 7, 2025, to provide the necessary stability for the communities near these wildfires to concentrate on safety, recovery, and rebuilding.
The Notice requires insurers to take immediate steps to cease any pending non-renewals in the areas where these wildfires are taking place.
Existing California law already prohibits insurers from refusing to renew policies without providing the policyholder with written notice at least 75 days in advance. Cal. Ins. Code section 678(c)(1): “At least 75 days before the policy expiration, the insurer shall deliver the notice of nonrenewal to the named insured or mail the notice of nonrenewal to the named insured at the address shown in the policy.” Commissioner Lara’s recent Notice, however, provides additional protections to many policyholders who saw their coverage disappearing as many insurers were exiting the California market this past year. Policyholders who received notices of non-renewals in the past year should review their notice dates for compliance with existing California law and Commissioner Lara’s January 9 Notice or contact their broker or insurance attorney for assistance.
In addition to these protections, Commissioner Lara’s Notice reminds insurers of their obligations pursuant to other existing California law enacted in response to other recent wildfires, including:
Grace period for premium payments: Upon a state of emergency, insurers must provide a 60-day grace period for the payment of insurance premiums for residential properties within the affected areas. Cal. Ins. Code section 2062. This grace period is intended to provide financial relief to homeowners who are dealing with the aftermath of the wildfires, including evacuation, temporary housing, and other disruptions. In his January 9 Notice, Commissioner Lara encourages insurance companies to extend this grace period beyond 60 days where reasonable, and to work with policyholders who are particularly impacted by the fires to ensure they can maintain their insurance coverage during this challenging time. Insurers extending the grace period must do so in a nondiscriminatory manner and are “especially encouraged” to work with individual policyholders who may not be able to pay their premiums on time.
Moratorium periods for nonrenewals and cancellations in fire perimeter and after declared disasters: Existing California law imposes a moratorium on the cancellation and non-renewal of residential property insurance policies in areas affected by wildfires. Specifically, insurers cannot cancel or refuse to renew residential policies for properties “within or adjacent to the fire perimeter” for one year after a state of emergency declaration. Cal. Ins. Code section 675.1(b)(1). Moreover, where an insured experiences a total loss to their residential property due to a declared disaster, insurers must offer to renew the policy for at least the next two years. See Cal. Ins. Code section 675.1(a)(3) (“the insurer shall offer, for at least the next two annual renewal periods, but no less than 24 months of coverage from the date of the loss, to renew the policy...”). These moratoriums are designed to ensure that homeowners in these areas are not penalized solely because their properties are in wildfire-affected zones.
Client Alert 2025-012