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 soaring premiums, many consumers have felt trapped between financial strain and limited options.
In 2024, however, a series of new state regulations introduced by the California Department of Insurance (CDI) offers a measure of relief. These reforms are designed to strengthen consumer protections, speed up claims handling, and give homeowners greater 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. Here is a clear breakdown of the most important updates and how they affect California homeowners.
Greater Freedom to Rebuild Somewhere Else
One of the most important changes for 2024 gives homeowners more control over where they rebuild after a total loss.
In the past, if a wildfire completely destroyed a home and the owner chose not to rebuild on the same lot, the insurance policy could reduce or restrict the payout. Homeowners who wanted to relocate to a safer area were often financially penalized.
Under the new rule, that restriction is gone.
As Susman explained, homeowners are no longer penalized for choosing to move rather than rebuild in the same high-risk area. Policyholders can now use their settlement funds to purchase or rebuild a home in a new location without losing benefits due to technical contract language.
For families living in repeatedly threatened wildfire zones, this reform provides long-overdue flexibility and supports the state’s broader goal of reducing exposure in the most dangerous areas.
New 60-Day Grace Period After a Declared Disaster
Another major consumer protection addresses premium payments after a disaster.
Whenever the governor declares a state of emergency, affected homeowners now automatically receive a 60-day grace period to pay their insurance premiums. During that time, coverage cannot be canceled for nonpayment.
In real-world terms, this protects homeowners who may be evacuated, displaced, or unable to access mail and banking services after a wildfire, flood, or other catastrophe. Previously, missed payments during these chaotic periods sometimes resulted in unintentional lapses in coverage.
The new grace period ensures continuity of insurance when homeowners are most vulnerable and least able to manage paperwork.
New Ability to Combine Coverage Categories After a Loss
Another significant reform gives homeowners more flexibility when rebuilding after a major loss by allowing certain coverage categories to be combined.
A standard homeowners policy separates coverage into different limits, including:
- Dwelling coverage for the main structure
- Other structures coverage for detached garages, fences, and sheds
- Personal property coverage for belongings
Before 2024, if a home’s dwelling limit fell short of actual rebuilding costs, homeowners could not use unused funds from other coverage categories to close the gap. With post-disaster building costs often far higher than estimates, this restriction left many families facing huge out-of-pocket expenses.
Under the new regulation, homeowners may now tap into other coverage categories, such as “other structures,” to help cover shortfalls in dwelling reconstruction.
Susman called this change unprecedented, noting that it could prevent serious financial hardship for underinsured homeowners. At the same time, he cautioned that homeowners should still aim to carry full replacement cost coverage and not rely on this flexibility as a substitute for proper insurance limits.
Faster Claims Handling and Stronger Communication Rules
Claims delays and communication failures following major wildfires have been a persistent source of homeowner complaints. The CDI’s 2024 reforms directly target those issues.
Under the new rules, insurers must follow strict timelines for:
- Providing claim status updates
- Issuing advance payments for additional living expenses
- Communicating delays or coverage decisions
- Notifying policyholders when an adjuster is changed
If an insurer assigns a new adjuster more than once, it must now supply a complete written summary of the claim to the new adjuster within a defined time frame. This helps prevent homeowners from having to repeatedly restart the claims process with each personnel change.
These measures are designed to improve transparency, speed recovery, and reduce confusion during some of the most stressful periods homeowners ever face.
How the State Farm Rate Increase Fits Into the Picture
The FOX KTVU segment also addressed State Farm’s 20% average homeowners rate increase approved for early 2024, affecting roughly five million California policyholders.
Susman described the increase as the result of long-term economic pressure rather than sudden corporate opportunism. For several years, the state limited rate hikes while construction costs, labor expenses, and reinsurance prices surged.
During that period, insurers absorbed rising losses without corresponding pricing adjustments. Now, those suppressed costs are being recaptured all at once. Susman characterized it as a “rubber band effect,” where years of delayed increases are snapping back into current pricing.
While painful for consumers, the increase reflects deeper structural issues in California’s insurance market tied to wildfire frequency, inflation, and regulatory lag.
What the 2024 Reforms Mean for Homeowners
Despite continued premium pressure, the new regulations create meaningful benefits for consumers:
- Homeowners can relocate after total loss without losing insurance benefits.
- A 60-day premium grace period prevents coverage lapses after disasters.
- Combined coverage lines provide flexibility when rebuilding costs exceed estimates.
- Mandatory claims timelines reduce delays and improve accountability.
- Clearer adjuster transition rules reduce confusion and repeated paperwork.
Together, these changes strengthen homeowner protections at a time when climate risk and insurance availability remain unstable.
A Market Still in Transition
California’s insurance system is still under strain from wildfire losses, rising reinsurance costs, and regulatory constraints rooted in Proposition 103. However, the 2024 reforms signal that regulators are actively attempting to modernize consumer protections while maintaining market stability.
For homeowners, this environment demands proactive management. Coverage limits should be reviewed regularly to reflect current rebuilding costs. Documentation should be carefully preserved. And working with experienced brokers remains critical for navigating both private-market options and state programs such as the FAIR Plan.
Final Thoughts
The 2024 California insurance reforms do not erase the challenges facing homeowners, but they represent meaningful progress. Greater rebuilding flexibility, automatic grace periods, faster claims timelines, and expanded use of coverage funds all reflect a system beginning to adapt to a new era of climate-driven risk.
As Karl Susman noted, the market is evolving under pressure. While rising rates and limited availability remain serious concerns, these regulatory changes give homeowners stronger rights, more breathing room, and better tools to recover when disaster strikes.
