California Enacts Year-Long Insurance Moratorium

In response to the devastating wildfires in Southern California, California Insurance Commissioner Ricardo Lara has enacted a one-year moratorium on insurance cancellations and non-renewals for homeowners affected by the Palisades and Eaton fires. This action, stemming from Gov. Gavin Newsom’s emergency declaration, aims to alleviate the stress on homeowners amid the crisis, as over 9,000 structures have been damaged or destroyed, resulting in at least 10 fatalities. Additionally, it has been reported that nearly 10% of Los Angeles homeowners lack insurance, a situation exacerbated by rising premiums and insurers withdrawing from the market due to wildfire risks. Lara is also investigating prior non-renewals of insurance policies and is seeking support from federal and state resources for those uninsured. The moratorium is designed to give Californians a reprieve while they recover from the fires, which have caused estimated losses of at least $50 billion. The California FAIR Plan, a backup insurance mechanism for high-risk areas, is also being scrutinized for its capacity to handle claims.