Insurance Commissioner BANS Cancellations - NewsNation Now with Nichole Berlie

Published Date: 01/11/2025

When the Insurance Commissioner Bans Policy Cancellations: What It Means for California Homeowners

As wildfires once again rage across California, forcing tens of thousands to evacuate, one of the most urgent questions facing homeowners isn’t just “Is my home safe?”—it’s “Will my insurance still cover me?”

In a NewsNation interview with Nichole Berlie, insurance expert Karl Susman—himself an evacuee of the Palisades fire—offered a candid, firsthand look into how California’s insurance system is adapting to yet another catastrophic fire season.
The discussion centered around a decisive move by the California Department of Insurance (CDI): the temporary ban on insurance policy cancellations and non-renewals for residents in wildfire-affected zones.

This unprecedented step is meant to shield homeowners from losing coverage at the exact moment they need it most—but as Susman explained, the situation is far more complex than it appears.

1. A Crisis on Two Fronts: Fire and Financial Exposure

The Palisades Fire, like many before it, has done more than destroy homes—it’s exposed the fragility of California’s insurance market.

“It’s hard to imagine,” Susman said. “We’re on day three, and containment is still just 8%. The winds are relentless, the planes can’t drop water safely, and the fire just keeps growing.”

For years, major insurers such as State Farm, Allstate, and Farmers have cut coverage or paused new policies across fire-prone regions. In the Palisades alone, State Farm non-renewed roughly 1,626 homeowners policies, one of the largest withdrawals in the state.

Those homeowners faced two difficult choices:

• Find coverage in the private market, often at dramatically higher rates.
• Or turn to the California FAIR Plan, the state’s insurer of last resort, which offers basic fire protection but limited coverage compared to a standard homeowners policy.

The underlying reality, Susman explained, is that insurance in California’s high-risk zones has become “challenging, but not impossible.”

2. The Commissioner’s Intervention: A 12-Month Lifeline

With wildfires now a near-annual crisis, California Insurance Commissioner Ricardo Lara enacted emergency protections preventing insurers from canceling or non-renewing policies for residents in and around active fire zones.

This 12-month moratorium effectively freezes insurers’ ability to drop customers, buying homeowners time to recover, rebuild, or relocate.

“The commissioner does what he usually does to protect consumers,” Susman explained.
“He comes in and tells all the carriers — not only can you not non-renew anyone in the affected or surrounding areas, but if someone’s policy lapses because of missed payments, you must offer them reinstatement.”

That detail—reinstatement—is critical. The policy does not renew automatically.

“If you’re in that area, you need to contact your insurance company or broker,” Susman urged.
“Tell them you want to keep your policy active or reinstate it if it’s lapsed. You’ll have to pay the bill, but this gives you a cushion—a year—to figure out your next step.”

3. Why the Ban Matters—and Its Hidden Limits

At first glance, this moratorium seems like a consumer victory. And in many ways, it is. For residents displaced by fire, the ban provides stability in chaos, ensuring they won’t lose coverage while their homes are at risk.

However, there are limitations to understand:

• The moratorium only applies to specific ZIP codes designated by the CDI as wildfire-impacted.
• It does not lower premiums—rates may still rise after the period ends.
• It does not cover new construction; rebuilding requires a different type of policy.
• Homeowners still need to take action to verify reinstatement or prevent unintentional lapses.

“Remember,” Susman emphasized, “a homeowner’s policy won’t cover you if you’re building from the ground up. You’ll need a construction or builder’s risk policy for that.”

These nuances matter. Many Californians, already overwhelmed by evacuation logistics and property loss, could unknowingly find themselves without full protection during the rebuilding phase.

4. When Homeowners Become Their Own Risk Managers

Susman’s interview wasn’t just about policy—it was about personal preparedness. As an evacuee himself, he described steps his family took to protect their property:

“We had to clear trees from the roofline, clear brush around the house—basically do everything we could to make the home less likely to burn.”

More insurers are now mandating wildfire mitigation measures like these before they’ll issue or renew coverage.
What once were “suggestions” are now requirements if homeowners wish to remain insured.

“Insurance companies aren’t just giving advice anymore,” Susman said.
“They’re saying, ‘If you want fire coverage, you must do X, Y, and Z to make your home less likely to burn.’”

That shift reflects a new insurance reality: homeowners must actively participate in risk reduction to maintain coverage.

This collaborative approach—between property owners, insurers, and regulators—may ultimately define the next chapter of California’s fire insurance future.

5. The Federal Factor: When Washington Steps In

During the broadcast, President Joe Biden pledged 100% federal coverage for California’s fire response, signaling direct federal aid for firefighting and disaster relief.
But what does that mean for insurance policyholders?

“California’s got money,” Susman said, “but it’s always nice to get some from somewhere else. That federal assistance helps free up state funds for recovery and rebuilding.”

While FEMA and federal funds assist in emergency response and debris removal, they don’t replace private insurance.

“You can’t rely on federal relief to rebuild your home,” Susman warned. “That’s why keeping your private insurance active is so essential.”

The message is clear: government assistance is temporary; insurance is long-term recovery.

6. A Look Ahead: Sustainable Insurance and Market Reform

Susman ended the interview with cautious optimism, pointing to recent regulatory changes aimed at reshaping California’s risk landscape.

In late 2024, the California Department of Insurance launched the Sustainable Insurance Strategy, a reform package requiring private insurers to offer coverage statewide—including in wildfire-prone regions—rather than cherry-picking low-risk areas.

“It’s going to force insurers to cover the whole state,” Susman explained.
“So, no, I don’t think fire insurance will become impossible to get. But we will see higher rates in high-risk areas and lower rates where wildfire risk is minimal.”

In other words, the state is moving toward a risk-based pricing model: homeowners who live in higher-risk zones will pay more, but they’ll still have access to private insurance rather than being forced into the FAIR Plan.

This transition is designed to stabilize the market long-term, though consumers will likely feel short-term pain in the form of increased premiums.

7. Lessons for Homeowners: Staying Insured During Crisis

From the interview, several practical takeaways emerged for homeowners navigating wildfire season and California’s volatile insurance climate:

✅ Stay in Contact with Your Insurer or Broker
If your area falls under a non-renewal moratorium, verify your policy’s status immediately. Don’t assume it’s active—confirm it.

✅ Keep Premiums Current
If you missed a payment, request reinstatement. The commissioner’s order gives you that right—but only if you act.

✅ Document Everything
Take photos and videos of your property and belongings. This evidence is critical if a claim arises after a disaster.

✅ Fireproof Your Home
Follow insurer recommendations—clear vegetation, install ember-resistant vents, and maintain defensible space. It can make or break your eligibility.

✅ Understand Policy Gaps
Rebuilding? You’ll need a separate builder’s risk policy. Operating a home-based business? Standard coverage won’t protect your equipment or liability.

✅ Plan for Renewal Changes
Once the moratorium ends, be prepared for potential rate increases. Talk to your broker early about options and mitigation discounts.

8. The Bigger Picture: Resilience Over Reaction

Susman’s own situation—evacuated yet calm—offered a living example of resilience through preparedness.

“Everything happens for a reason,” he reflected. “We’re together, we’re safe, and that’s what matters. Everything else can be rebuilt.”

His words underscore a truth at the core of every insurance discussion: policies can replace property, but they can’t replace people.

Still, as wildfires intensify and insurers reassess risk, Californians must adapt. The future of insurance won’t be about eliminating risk—it will be about managing it intelligently.

With policies like the Sustainable Insurance Strategy and emergency moratoriums protecting residents during disasters, California is slowly transitioning from crisis response to resilience planning.

Conclusion: The Insurance Lifeline Amid the Flames

As California burns, the insurance system is being stress-tested like never before.
Commissioner Lara’s ban on cancellations may be temporary, but it represents a vital lifeline—a pause button allowing thousands of families to regroup, rebuild, and rethink their protection strategies.

For now, homeowners in affected regions can breathe a small sigh of relief: their insurance won’t vanish in the midst of disaster.
But the larger challenge—sustaining a fair, functional insurance market in an era of escalating climate risk—remains.

Susman summed it up best:

“Challenging, but not impossible.”