Fire insurance: reporting on cancellation and nonrenewal.
If enacted, SB 365 will directly influence how residential property insurance is handled in California, particularly in areas susceptible to wildfires. By requiring insurers to adhere to a one-year prohibition against cancellation or nonrenewal, the bill reinforces consumer protections for those in the most vulnerable geographic areas. The Department of Insurance will also be tasked with reporting on the impact of this measure, providing oversight to evaluate how the prohibition affects policy cancellations across adjacent ZIP Codes.
Senate Bill 365, introduced by Senator Alvarado-Gil, seeks to amend Section 675.1 of the California Insurance Code concerning residential property insurance, specifically focusing on fire-related policies. The bill primarily aims to address challenges faced by property owners near wildfire perimeters by prohibiting insurers from cancelling or refusing to renew residential property insurance policies for at least one year after a declared state of emergency due to fire incidents. This provision is intended to give homeowners time to recover and rebuild without the added pressure of losing their insurance coverage due to the risks associated with wildfires.
There may be contention surrounding this bill regarding the implications for insurance companies, whose ability to manage risk could be constrained by these requirements. Advocates for the bill argue it effectively protects homeowners in areas that frequently face natural disasters, allowing time for recovery post-catastrophe. However, critics, possibly including some in the insurance industry, might contend that these restrictions could lead to higher insurance premiums or limitations in coverage availability for residents, potentially creating a negative ripple effect in the housing market.