(Airdate: 2024-01-10) FOX - KTVU - Insurance Changes For California

Published Date: 01/10/2024

New Year, New Rules: How 2024 Insurance Reforms Are Changing the Game for California Homeowners

California homeowners have spent the past few years navigating one of the most turbulent insurance markets in the nation. Between record-setting wildfires, insurer withdrawals, and rising premiums, many consumers have felt trapped between financial strain and limited options.

But 2024 brings a glimmer of good news. A slate of new state regulations—introduced by the California Department of Insurance (CDI)—aims to strengthen consumer protections, speed up claims, and give homeowners more flexibility after disasters.

In a recent FOX KTVU segment, insurance expert Karl Susman, president of Susman Insurance Agency, joined anchor Alex Savidge to explain what these changes mean in practical terms. The discussion shed light on several key reforms that could make a real difference for policyholders recovering from wildfires or other declared disasters.

Let’s break down these updates and explore how they fit into California’s broader insurance landscape.

1. Homeowners Can Now Rebuild Elsewhere Without Penalty

One of the most significant regulatory updates for 2024 involves greater flexibility in rebuilding after a total loss.

Under previous insurance contract rules, if a home was destroyed—say, in a wildfire—and the owner chose not to rebuild on the same lot, the insurer could reduce or deny full payment of the policy benefit. Homeowners who wanted to relocate to a safer area or different community were effectively penalized for not rebuilding in the same spot.

Susman explained that the new regulation changes that:

“In the past, if your house burned down and you didn’t want to rebuild in a high fire area, the contract penalized you. With this regulation in place, you’re no longer penalized for moving elsewhere.”

This means homeowners can now “cash out” their policy and apply those funds toward purchasing or rebuilding a home in a new location—without losing value due to restrictive wording in their insurance contract.

For many Californians living in repeated wildfire zones, this reform offers a sense of freedom and safety that wasn’t possible before. It also aligns with the state’s broader goal of risk reduction and managed retreat from high-hazard areas.

2. A 60-Day Grace Period for Premium Payments After a Disaster

Another consumer-friendly change addresses a simple but critical issue: how homeowners stay insured when disaster strikes.

Whenever the governor declares a state of emergency, affected homeowners now automatically receive a 60-day grace period to pay their insurance premiums.

“Think about it,” Susman explained. “If there’s a wildfire or flood, people can’t even get to their mailbox. They don’t know their bill is due. This gives them breathing room.”

Previously, many homeowners inadvertently lost coverage after disasters simply because they couldn’t make timely payments amid evacuations and chaos. Now, this grace period ensures continuous coverage during critical recovery phases—without the added stress of immediate payment deadlines.

3. Combining Coverage Categories to Rebuild More Flexibly

One of the most innovative—and potentially transformative—changes for 2024 allows homeowners to combine different categories of coverage within their insurance policy after a disaster.

Traditionally, a homeowners insurance policy divides coverage into separate limits:

• Dwelling coverage (Coverage A) – for the main structure.
• Other structures (Coverage B) – for items like detached garages, sheds, or fences.
• Personal property (Coverage C) – for belongings inside the home.

Before this rule change, if your dwelling limit wasn’t enough to rebuild your house, you couldn’t use leftover funds from other coverage categories to make up the difference. That led to devastating shortfalls for many homeowners—especially when construction costs surged after a disaster.

Susman emphasized the importance of this reform:

“This is huge. If there’s a shortfall in the dwelling coverage amount, you can now tap into another line—like ‘other structures’—to fill that gap. It’s never been done before.”

That flexibility could prevent many underinsured homeowners from facing massive out-of-pocket costs when rebuilding. However, Susman also issued a warning:

“Don’t think we can underinsure now and use this as a cushion. You don’t want to rely on that.”

In other words, while this rule provides a helpful safety valve, homeowners should still aim to maintain full replacement coverage for their dwellings.

4. Faster Claims Handling and Greater Transparency

Perhaps the most homeowner-relieving news in the 2024 bulletin involves new timing and communication standards for insurance claims.

In the wake of widespread criticism about slow or confusing claims processes following major fires, the CDI now requires insurers to adhere to strict deadlines when managing claims.

Susman summarized the changes:

“The commissioner has set out specific timelines—how long an insurance company can take before giving an update, how quickly they have to issue advance payments for living expenses, and even how soon they must notify you if they change adjusters.”

If an insurer changes adjusters more than once, they now have to provide a full summary of your claim history to the new adjuster within a set number of days—ensuring continuity and reducing the frustration of having to re-explain your situation each time.

These measures are designed to streamline the recovery process, cut down red tape, and improve accountability across the industry.

5. Understanding the State Farm Rate Increase: A “Rubber Band Effect”

The KTVU segment also touched on one of the biggest stories of early 2024: State Farm’s 20% average rate increase for California homeowners. The rate hike affects roughly five million policyholders and comes amid widespread cost inflation and catastrophic wildfire risk.

Susman broke it down with characteristic clarity:

“It’s math. There’s no magic to it. An insurance company can’t make money unless it sells insurance. So if they’re choosing not to sell, there must be a reason—they’re not able to charge the premium they need to stay profitable.”

He described the rate surge as a “boomerang effect.” For nearly three years, the Insurance Commissioner suppressed rate increases to protect consumers during economic volatility. But during that same period, inflation soared, lumber and labor costs doubled, and supply chains broke down.

Now, as Susman put it, “the rubber band is snapping back.” Insurers are recouping years of suppressed costs all at once—leading to sharp but arguably inevitable increases.

What These Reforms Mean for Homeowners

While premium hikes remain painful, the new regulatory protections introduced in 2024 mark a step toward greater fairness and efficiency in the state’s insurance system.

Here’s how these changes benefit homeowners directly:

   Change Consumer Benefit     Rebuild flexibility No penalty for relocating after total loss; encourages rebuilding in safer areas.   60-day grace period Prevents coverage lapses after disasters.   Combining coverage lines Provides financial flexibility when rebuilding exceeds estimated costs.   Faster claims timelines Reduces waiting periods and improves communication during recovery.   Transparent adjuster transitions Minimizes confusion and repetitive claim explanations.   

Together, these reforms represent a pro-consumer shift in California’s approach to insurance regulation—balancing oversight with adaptability in a rapidly changing risk environment.

A New Chapter for California’s Insurance Market

California’s insurance ecosystem remains in flux. Insurers continue to grapple with wildfire losses, rising reinsurance costs, and strict regulatory constraints under Proposition 103. But the 2024 rule changes show that the California Department of Insurance is listening to both sides of the debate—recognizing the need to protect consumers while modernizing outdated frameworks.

For homeowners, the message is clear:

• Stay informed about policy changes.
• Review your coverage regularly to ensure it matches current rebuilding costs.
• Work with experienced brokers who understand both traditional carriers and state programs like the FAIR Plan.

Final Thoughts: Progress Amid Uncertainty

As Karl Susman put it, the latest reforms signal a much-needed evolution in how California handles home insurance amid escalating climate risk. While rising rates and limited availability remain challenges, the regulatory transparency, claim reforms, and rebuilding flexibility introduced this year reflect a system adapting to new realities.

For homeowners recovering from loss—or simply trying to protect their most valuable asset—2024’s policy changes offer new tools, new rights, and perhaps, at last, a little breathing room.