New California Insurance Bills Could Reshape Coverage
Published Date: 03/14/2025
California’s insurance landscape is facing unprecedented change. While wildfires, climate risks, and rising costs dominate headlines, a quieter but equally powerful shift is underway in Sacramento: a wave of new insurance legislation that could permanently alter how policies are priced, claims are handled, and risks are managed.
On Insurance Hour, host Karl Susman walked listeners through ten proposed laws now under debate—each with far-reaching implications for homeowners, businesses, and insurers alike. Below is a clear breakdown of the most consequential proposals, what they aim to fix, and what they could mean for the future of California’s insurance market.
The California Safe Homes Act
Authored by Assemblymember Lisa Calderon, the California Safe Homes Act would provide state-funded grants to homeowners who complete wildfire mitigation upgrades such as fire-resistant roofs, ember-resistant vents, and defensible-space clearing.
The goal is to reduce wildfire exposure at the property level and make homes less costly to insure. Supporters say this could strengthen community resilience and lead to measurable insurance savings, especially for lower-income homeowners who can’t easily afford mitigation upgrades.
However, the program would rely on state funding, which could strain the budget. There are also concerns about fraud, administrative inefficiency, and whether homeowners would need to front costs before being reimbursed.
As Karl Susman noted, “We all want lower premiums, but the only way to get them is to lower the risk—and that starts at the home level.”
The Business Insurance Protection Act
Proposed by Senators Sasha Renee Perez and Susan Rubio, this bill would extend post-disaster non-renewal moratoriums—currently available to homeowners—to business insurance policies.
After major wildfires, many small businesses lose coverage at the exact moment they need it most. Supporters argue this law would stabilize local economies, protect jobs, and reduce community-wide economic disruption by keeping businesses insured during recovery.
Critics warn that it could increase insurer risk and trigger premium hikes for commercial policies. There are also concerns about whether the law could face legal challenges related to private contract limitations.
Susman cautioned that while protections matter, mandates that interfere with private contracts must be carefully designed to avoid unintended consequences.
The Insurance Premium Protector Act
Authored by Assemblymember John Harabedian, this proposal would cap public adjuster fees at 15% and prohibit compensation outside the contract.
After disasters, homeowners often hire public adjusters to help navigate complex claims. But surging demand has led some adjusters to charge fees as high as 30% of settlements. This bill aims to keep more claim money in the hands of wildfire victims so they can rebuild.
Supporters say the bill enhances fairness and transparency. Opponents argue fee caps could discourage experienced adjusters from taking complex cases, reduce competition, and represent excessive government interference in private pricing.
Susman summed up the tension clearly: “I understand protecting consumers, but blanket caps on private industry pricing can backfire. Markets need flexibility to function.”
The Eliminate the List Act
Introduced by Senator Ben Allen, this bill would require insurers to pay 100% of personal property coverage to wildfire victims without requiring a detailed contents inventory.
Currently, homeowners must itemize every lost possession—an emotionally draining and time-consuming process after total loss. This proposal would speed recovery and reduce trauma for disaster survivors.
Supporters see this as a humane reform. Opponents worry it creates significant verification challenges, increases the risk of inflated or fraudulent claims, and could drive higher premiums statewide as insurers price in the added uncertainty.
Susman warned, “If insurers are required to pay full limits no matter what, they’ll start pricing policies higher to cover the uncertainty.”
The California Community Fire Hardening Commission Act
Proposed by Senators Susan Rubio, Dave Cortese, and Henry Stern, this bill would create a statewide commission within the Department of Insurance to standardize home-hardening inspections and establish discount programs for compliant homeowners.
The intent is to encourage uniform safety standards and community-wide participation in wildfire mitigation. Backers believe this could create consistent incentives for fire-resistant construction and landscaping.
Critics argue the bill could add bureaucracy, impose non-scientific standards, and force insurers to offer discounts not supported by actuarial data. Susman cautioned that government-led standards must not replace data-driven underwriting: “If private insurers are forced to use non-actuarial standards, it undermines the integrity of the entire risk-pricing process.”
The Deceptive Disaster Relief Advertising Act
Authored by Assemblymember Heath Flora, this legislation would require disaster-recovery advertisements to clearly disclose: “This is a solicitation for business, not affiliated with any government entity or nonprofit.”
The goal is to curb fraud and misleading marketing after disasters, when scammers often exploit vulnerable victims.
Supporters say it protects consumers and promotes ethical advertising. Opponents question whether scammers would comply and note potential First Amendment challenges related to compelled disclosures.
Susman supported the intent but questioned the impact: “Scammers don’t follow the law anyway. Adding text to ads might not fix the real issue.”
The California Wildfire Public Model Act
Proposed by Senator Dave Cortese, this bill would create a state-run wildfire catastrophe model—the first public model of its kind in the nation.
Supporters argue it would improve transparency, public policy planning, and community understanding of wildfire risk. Opponents warn that political or non-actuarial control over modeling could distort risk pricing and undermine insurer confidence.
“Actuaries, not politicians, should be modeling risk,” Susman said. “Public models can supplement private data—but they shouldn’t replace it.”
What These Bills Reveal About California’s Direction
Taken together, these proposals signal a shift toward deeper state involvement in insurance pricing, claims handling, and disaster risk management. Lawmakers are clearly prioritizing consumer protection, wildfire mitigation, and systemic transparency.
At the same time, these bills highlight the growing tension between political solutions and actuarial reality. Many reforms are well-intentioned but risk distorting markets if not grounded in sound risk modeling.
As Susman observed, “Every law that helps one side can hurt another. The goal should be balance—not politics.”
Insurance in an Era of Permanent Catastrophe
Behind every proposed bill is a deeper truth: California’s risk profile has fundamentally changed. Wildfires now burn nearly year-round. Coastal flooding is rising. Earthquake exposure remains constant. Insurers are struggling to price risk accurately while operating under regulatory systems built decades ago.
At the same time, Proposition 103 continues to limit how quickly rates can adapt, pushing carriers to withdraw rather than operate at sustained losses. Sacramento’s legislative surge is an attempt to stabilize a system under historic pressure—but whether it reinforces or weakens the market remains uncertain.
What Homeowners and Businesses Should Do Now
As these bills move through the legislative process, consumers should remain proactive. Follow updates from the California Department of Insurance and trusted industry experts. Harden properties with defensible space and fire-resistant materials. Review coverage limits to ensure they reflect true rebuilding costs. Maintain updated digital inventories for faster claims processing. Work with independent brokers who can shop both admitted and surplus-line markets as conditions evolve.
Reform on the Horizon
If even a few of these proposed laws pass, 2025 could mark the most significant regulatory shift in California insurance in decades. From wildfire grants and public catastrophe models to claims reform and advertising rules, the direction is clear: increased oversight, stronger consumer safeguards, and greater focus on climate resilience.
The true challenge will be execution. Whether these measures bring stability or more friction depends on how carefully lawmakers balance public protection with private-market sustainability.
As Karl Susman concluded, “We don’t need to reinvent insurance. We just need to make sure the system works—for consumers, for carriers, and for California.”
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