The insurance commissioner of California has enforced a one-year suspension on insurance policy cancellations in areas affected by wildfires, aiming to safeguard the residents impacted.
According to California’s insurance commissioner, Ricardo Lara, a newly established one-year moratorium on non-renewal of insurance policies is now in effect for Los Angeles and nearby wildfire-impacted regions. This freeze was announced on January 9.
“I am utilizing my moratorium powers to halt insurance companies from canceling or refusing to renew policies in areas affected by wildfires, ensuring that individuals do not undergo the extra burden of searching for new insurance during this devastating time,” Lara stated in a
statement.
The one-year suspension of policy cancellations and non-renewals applies to residents in and near the ZIP codes impacted by the Palisades and Eaton fires in Los Angeles County, irrespective of whether the properties suffered damage, according to Lara.
The ZIP codes included in this moratorium are detailed in the
Commissioner’s Bulletin, which officially formalizes the freeze. The California Department of Insurance may issue an additional bulletin should more ZIP codes be identified as being within or near the fire perimeter connected to the declared state of emergency for Los Angeles and Ventura counties, as noted by Lara.
The authority to enforce such moratoriums was granted to the insurance commissioner by
Senate Bill 824, which was introduced by Lara during his time as a state senator and became law in 2018. This legislation bars insurers from canceling or refusing to renew residential property policies in wildfire-affected areas when a state of emergency is declared. It further provides policyholders who lose their homes to fire with coverage for up to 24 months.
The moratorium is effective from January 7, the day Gov. Gavin Newsom
declared a state of emergency to assist the communities affected by the fires. Newsom’s declaration emphasized that the majority of Southern California faced life-threatening winds and a heightened risk of fire.
In addition to the moratorium, Lara
announced a two-day workshop scheduled for January 18–19 aimed at assisting residents affected by the fires in understanding their insurance policies and offering further resources.
As of now, at least 10 fatalities have been confirmed due to the wildfires, as reported by Los Angeles County officials
confirmed. Approximately 180,000 individuals are currently under mandatory evacuation orders as firefighters continue their efforts to combat the raging flames.
Nearly 36,000 acres have been scorched and more than 10,000 structures have been destroyed by the wildfires in the Los Angeles region,
according to Cal Fire’s report released Friday morning. Meteorologists predict that the heightened fire weather risk will persist into Friday.
The projected economic losses and damages resulting from the fires are estimated to range between $135 billion and $150 billion, based on data released by AccuWeather on January 9. Previously, the company had estimated damages to be between $52 billion and $57 billion. This preliminary estimate includes both insured and uninsured losses, factoring in property damage, loss of income, infrastructure destruction, supply chain interruptions, and other related consequences.
“These rapidly moving, wind-driven wildfires have resulted in one of the most costly wildfire disasters in modern U.S. history,” stated AccuWeather Chief Meteorologist Jonathan Porter. “Hurricane-force winds propelled flames through neighborhoods filled with multi-million-dollar homes. The aftermath is devastating, and the economic impact is overwhelming.”
The insurance industry is preparing for considerable losses. Early estimates from Morningstar DBRS suggest that this disaster could lead to $8 billion in insured losses.
“The affordability of property insurance is expected to remain an ongoing challenge in the state, with many homeowners choosing to remain uninsured or underinsured due to high premiums,” remarked Patrick Douville, vice president of global insurance and pension ratings at Morningstar DBRS, in a note dated January 9
note.
Analysts from Bloomberg Intelligence
project that insured losses could surpass $10 billion, citing the high value of at-risk properties.
