California bans insurance cancellations for 750,000 wildfire victims

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(Bloomberg) –California has ordered home insurers to maintain coverage over the next year for 750,000 customers in four counties ravaged by wildfires still burning east of Los Angeles.

The moratorium blocks insurers from canceling or not renewing policies in areas affected by the line, airport and bridge fires, the California Department of Insurance said Thursday. The protection covers policyholders regardless of whether their homes have burned down.

The freeze on cancellations is retroactive to yesterday, when Gov. Gavin Newsom declared a state of emergency in the region. Insurance Commissioner Ricardo Lara may block companies from denying coverage because of a 2018 law designed to provide temporary relief to wildfire victims. Nearly a million policies have been placed under moratorium this year alone, according to the insurance department.

“Wildfire survivors shouldn’t have to worry about insurance while they recover,” Lara said in a statement.

Read more: California’s insurer of last resort is unprepared for a major disaster

Fueled by hot and windy weather, the three wildfires in Orange, Riverside, Los Angeles and San Bernardino counties burned more than 117,000 acres (47,348 hectares). They caused widespread evacuations, injured at least two dozen people and destroyed about 200 structures.

California has deployed members of the National Guard and secured federal assistance to help fight the fires, which are still only partially contained.

The threat of wildfires has upended the insurance market in recent years, with companies like State Farm, Allstate and USAA cutting coverage. Premiums have risen for many homeowners while others have struggled to find coverage. This led to the rapid growth of the state’s insurer of last resort, the FAIR plan.

Lara is promoting a regulatory overhaul aimed at stabilizing the market and encouraging insurers to resume writing policies. The new rules, which would allow insurance companies to use future models of climate change to set rates and factor in the cost of reinsurance, are expected to come into effect by the end of the year.