California homeowners have one new protection as the Los Angeles wildfires continue to ravage roughly 29,000 acres.
California Insurance Commissioner Ricardo Lara issued a one-year moratorium that protects homeowners’ insurance if they live in the areas impacted by the Palisades and Eaton wildfires on Thursday.
Why It Matters
The Palisades fire was the first to begin at 10:30 a.m. local time Tuesday morning. Since then, more than 5,000 properties have been destroyed.
The wildfires have also led to at least 10 deaths as of Thursday night.
Los Angeles homeowners also face significant risks of losing their homes. In a new LendingTree report, one in 10 Los Angeles homes were found to be uninsured. This is driven in part because home insurance has skyrocketed due to wildfire risks in California, and many home insurers have left the area completely.
For homeowners who do have insurance, though, the threat of losing insurance amid the wildfires is prevalent as insurers look to retain profits and cut their losses.
What To Know
Lara’s moratorium is in effect until January 7, 2026, and prevents insurance companies from canceling insurance plans or enacting non-renewals for the year-long period.
This applies to all homeowners who live within the perimeters of the Palisades and Eaton wildfires.
The Department of Insurance website tells residents if their zip code is included in the moratorium.
You can contact the department if you feel your insurer violated the new rule at 800-927-4357.
What People Are Saying
California Insurance Commissioner Ricardo Lara said in a statement: “Losing your insurance should be the last thing on someone’s mind after surviving a devastating fire. This law gives millions of Californians breathing room and hits the pause button on insurance non-renewals while people recover.”
Alex Beene, a financial literacy instructor for the University of Tennessee at Martin, told Newsweek: “It’s very welcome news to a community that desperately needs reassurance insurance providers will be there for them in the coming months. The moratorium on non-renewals and cancellations for the next year ensures those affected by the devastating fires will receive coverage from providers during the initial stages of the rebuilding process. In the short term, it offers stability for those homeowners and their financial futures they’ll need to recover. In the long term, it could set a precedent for future disasters of this kind for the government to take a more active role in helping residents attain the insurance services that unfortunately can be pulled during a tragedy such as this.”
Ryan McCall, Principal Attorney with McCall Sweeney & Silva, P.C., told Newsweek: “What you are seeing in this situation is the legislators working to help those who are currently being impacted by the ongoing wildfires. Frustrations had been mounting about insurance carriers opting to not cover wildfire related damages and I would expect that as the damage totals continue to mount that the California legislature will continue to exercise greater control over the insurance companies to be able to help their citizens.”
Title and escrow expert Alan Chang told Newsweek: “This is welcome news for existing homeowners impacted by recent events. A year is a substantial amount of time, but I’m curious if that is enough time to see meaningful change and improvement in the insurance practices in California.”
InsuranceQuotes.com analyst Michael Giusti told Newsweek: “I am sure this moratorium will let people breathe a sigh of relief for a little while. This really is targeting homeowners who did not suffer a loss but who were close to the fire zone. If they did suffer a loss, then their insurer would need to pay out according to the policy even without this change. The danger of non renewals is really for the neighbors who skirted through. It would be a tragedy for them to have survived the fire, only to be dropped by their insurer shortly thereafter. This prevents that, at least for the next calendar year.”
What Happens Next
Home insurers can expect a significant number of damage claims to come in within the next few weeks as thousands of properties have already been destroyed.
J.P. Morgan analysts said Thursday that the financial losses from the wildfires could go beyond $50 billion. Insurance losses alone are expected to exceed $20 billion.
“While this moratorium is more than welcome, California homeowners also need long-term solutions,” Giusti said. “With California’s homeowners insurance market in crisis right now, a long-term solution is an issue many people are going to be grappling with for a while.”
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