SACROMENTO — Almost six months after a community was destroyed in Los Angeles, California, lawmakers are writing legislation seeking to protect the state insurance program for high-risk homes from financial collapse.
Bill AB 226, sponsored by assembly members Lisa Calderon (D-Whittier) and David A. Alvarez (D-San Diego), avoids disasters to state insurance companies that are eligible for state-backed loans and bond loans from California’s infrastructure and economic development banks.
Alvarez proposed this measure last year but failed. Despite unanimous support in Congress, the bill never reached the Senate floor before the 2024 legislative session ended.
If the measure was passed last year and the governor signed the law, the fair plan would have been more flexible to survive the huge number of claims filed after the fire service in January, Alvarez said.
Instead, the Fair Plan was forced to impose an extra $1 billion total valuation on insurers that provide California homeowners’ policies. To recover these costs, insurance companies are expected to increase homeowners’ fees through monthly additional fees.
“If they could use this option… they wouldn’t need to hit consumers with price increases in the private market right now,” Alvarez said.
AB 226 is still one of many wildfire-related bills through a slow legislative process. If passed to the law, this measure will protect homeowners from price gouging after disasters, streamline the process of filing claims for lost property, and provide financial protection to disaster victims.
Lawmakers and Gov. Gavin Newsom in January approved $2.5 billion in wildfire aid after the Palisades and Eaton fires killed more than 20 people, making it the second and third most destructive fire in state history. Legislative leaders at the time signaled a quick, bipartisan approach to disasters.
“Ten thousands of our neighbors, family and friends need help, which means we need to move with urgency, put the difference aside, focus on lasers on providing financial resources, deliver boots to the ground we need, and have the policy relief we need to get our neighborhood cleaned.
Fairplan, the last ditch home insurance company in California, is intended as a backup for properties that are deemed high risk and uninsurable by private companies. The Times analysis found that within the Eton and Palisade fire zones, the number of planned homes almost doubled between 2020 and 2024, making the plan one of the state’s biggest insurance companies.
In a lawsuit alleging conspiracy between private insurers and fair plans and policyholders, policyholders raising concerns over delays in payment and smoke damage investigations have repeatedly called for lawmakers and insurance advocates to maintain insurance in emergencies and be viable as a long-term solution to state insurance issues, as proposed in AB 226.
This year, Alvarez was joined by Calderon, chairman of the Parliamentary Insurance Committee. It passed Congress in the beginning of March, but has yet to see the first Senate committee.
Alvarez celebrates the bill’s swift passing through Congress and hopes the Senate will work to do the same.
Other major wildfire bills being considered by lawmakers include:
AB 493 must pay policyholder interest on disaster insurance payments held by the lender in escrow. Written by Congress member John Halavedian (D-Pasadena), the measure closes loopholes in existing laws and requires the payment of interest on other escrowded funds.
AB 597 was introduced by Harabedian to prevent public insurance adjusters from guiling homeowners, particularly after natural disasters and emergencies.
SB 495 prevents insurers from requesting an itemized list of personal property losses from policyholders during an emergency, and requires insurers to provide an extension that has been delayed in reconstruction. The bill, introduced by Senator Benjamin Allen, who represents the Pacific Pallisard and Santa Monica region, passed a Senate floor vote on Tuesday and headed for Congress.
Most of the pending laws do not directly support survivors of the Palisades and Eton fires, but they remain important to the reconstruction process, said Mariamser, president honorary at the Pacific Parisades Community Council and founder of the Palisades Restoration Coalition.
The new law will help prevent and prepare for future fires, she said, and it is a good-intention show for communities that are still struggling.
Some of the other fire relief measures focus on easing the reconstruction permit process, while other fires extend the provisions set by Newsom during an emergency. It eases tenant rights for people staying in temporary housing for more than 30 days, shortens the schedule of permit approvals, and ensures mortgages for the largest facility in the year after a disaster. Others are trying to address the California Department of Forestry and Fire Prevention staffing issues as the fire season turns into a year-round threat.
“Wildfire survivors continue to face housing anxiety, financial strain and emotional trauma long after the immediate dangers have passed,” Los Angeles County supervisor Lindsey Horvas said in a statement. “These state bills represent our commitment to actively recover, rebuilding our lives and meeting people who need long-term support.”
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