California’s Mandatory Moratorium on Residential Property Insurance: What Homeowners Need to Know
Have you ever been worried about your home insurance being canceled just because your property is near a wildfire zone? If so, you’re not alone. For many Californians, this fear becomes a harsh reality after a wildfire sweeps through their community. However, there’s important news for homeowners in the wake of the latest wildfire season, and it can make all the difference for your peace of mind.
The recent Mandatory Moratorium on Cancellations and Non-Renewals of Residential Property Insurance Policies issued by California Insurance Commissioner Ricardo Lara is designed to protect you, the homeowner, from losing your insurance coverage after a wildfire. This protection is a game-changer, especially with the increasing frequency and intensity of wildfires in California.
But what exactly does this moratorium mean for you? How does it work? Let’s break it down.
Make it stand out
What Is the Mandatory Moratorium?
In simple terms, this moratorium prohibits insurance companies from canceling or refusing to renew your residential property insurance policy if your home is located in or near a wildfire zone. If a state of emergency is declared due to wildfires, your insurance coverage is safe for one year, regardless of the risks posed by the proximity of wildfires. This includes homeowners, condo owners, and even renters whose policies cover residential properties affected by fire risks.
This rule is part of California Senate Bill 824, which became law in 2018. Its purpose is to give homeowners breathing room to recover from the disaster without the additional stress of losing their insurance coverage. Think about it: if your property was close to a wildfire, would you feel comfortable knowing your insurance could be canceled just as you’re trying to rebuild or recover?
Why Does This Moratorium Matter?
Consider this scenario: you’ve just survived a wildfire. Your home is still standing, but the entire area around it has been burned. The last thing you need is your insurance provider telling you they’re dropping your coverage because of the fire risk. It’s a situation that countless Californians have faced in recent years, and it’s what this moratorium aims to prevent.
By prohibiting cancellations or non-renewals for a year, the law gives homeowners time to figure out their next steps without worrying about whether they’ll have insurance coverage. Wildfires can cause enough devastation on their own—losing insurance shouldn’t add to the burden.
What Areas Are Covered?
This isn’t a blanket rule for the entire state. The moratorium kicks in when the Governor of California declares a state of emergency due to wildfires. As of September 2024, Governor Gavin Newsom declared a state of emergency for areas affected by the Line Fire, Bridge Fire, and Airport Fire. Specific ZIP codes within and adjacent to the fire perimeter are listed in the official bulletin, and the moratorium applies to these zones.
For example, the Line Fire affected multiple ZIP codes in San Bernardino County, while the Bridge Fire impacted areas in Los Angeles and San Bernardino. Homeowners in ZIP codes like 92305, 92317, and 92399 are now protected under the moratorium. The same goes for residents in Orange County and Riverside County who were affected by the Airport Fire.
If your home falls within these zones, your insurance provider cannot drop your coverage for at least one year after the fire.
How Does This Benefit You?
The most significant advantage of the moratorium is peace of mind. Knowing that your insurance coverage is secure for the next 12 months allows you to focus on other essential aspects of recovering from a wildfire. Whether it’s repairing damage, finding temporary housing, or simply taking care of your family, you won’t have to worry about whether your insurance is in jeopardy.
Additionally, insurance companies are required to offer to rescind any cancellation notices they issued after the emergency declaration. This means that even if you received a notice saying your policy was canceled, the insurer must reverse that decision if the cancellation was due to wildfire risk.
This moratorium also applies to non-admitted insurers—those companies that operate without being fully regulated by the California Department of Insurance. So, no matter who your insurance provider is, they are bound by this moratorium if your property is in a covered ZIP code.
What Happens After One Year?
A valid question is, “What happens once the moratorium period ends?” After the one-year period, insurance companies can review policies for renewal or cancellation based on risk factors. However, during this time, you can take steps to reduce your wildfire risk and make your home more insurable in the long run.
Many insurers encourage homeowners to mitigate fire risks by clearing brush, installing fire-resistant materials, and improving overall property defenses. By taking these steps, you can increase the likelihood of keeping your coverage even after the moratorium ends.
What Should You Do Now?
If you live in one of the affected areas, now is the time to take advantage of the moratorium’s protections. Here are a few steps to consider:
Check if your ZIP code is covered: The full list of protected ZIP codes is available through the California Department of Insurance. If your area was near a wildfire, check the latest bulletins to confirm you’re protected.
Contact your insurance provider: Even though they can’t cancel your policy, it’s always good to stay informed. Ask about your coverage, how the moratorium affects you, and what you can do to keep your policy in good standing.
Consider fire mitigation strategies: Use the one-year period to improve your home’s resilience to fire. Not only will this protect your property, but it could also help ensure that your insurance provider renews your policy when the moratorium ends.
Final Thoughts
Wildfires are a devastating reality in California, but the state has taken steps to protect homeowners from losing their insurance coverage when they need it most. The Mandatory Moratorium on Cancellations and Non-Renewals of Residential Property Insurance Policies is a lifeline for anyone living in or near wildfire-prone areas.
If you’re in one of the affected ZIP codes, this moratorium gives you time to recover without the fear of losing your insurance. It’s a crucial step in protecting California homeowners and ensuring that, even after disaster strikes, you won’t be left unprotected.
Are you prepared to make the most of the next year? Taking action now could make all the difference in keeping your home and your peace of mind secure.
This blog article is based on information from California Insurance Bulletin 2024-9, issued by Insurance Commissioner Ricardo Lara. The bulletin outlines the Mandatory Moratorium on Cancellations and Non-Renewals of Residential Property Insurance Policies following a state of emergency due to wildfires in specific ZIP codes across California (California Insurance - …).