California Issuing Moratorium on Renewals

Los Angeles, California, USA early morning downtown cityscape.

California has issued a ruling on insurance renewals and cancellations. Under their insurance code, if a state of emergency has been declared for a certain ZIP code, any insurance payments must be postponed for a certain amount of time.

This comes as wildfires continue to ravage the state and has led to Governor’s declared state of emergency for the entire state. Under the California Insurance Code section 675 (B)(1)An insurer shall not cancel or refuse to renew a policy of residential property insurance for a property located in any ZIP Code within or adjacent to the fire perimeter, for one year after the declaration of a state of emergency, as defined in Section 8558 of the Government Code , based solely on the fact that the insured structure is located in an area in which a wildfire has occurred.  This prohibition applies to all policies of residential property insurance in effect at the time of the declared emergency” The section outlines that if there is structural damage from a fire and the policy comes due, they would need to hold off on getting the payment.

However, it doesn’t come into effect if the following occurs:

(1) If willful or grossly negligent acts or omissions by the named insured, or his or her representatives, are discovered that materially increase any of the risks insured against.

(2) If losses unrelated to the post disaster loss condition of the property have occurred that would collectively render the risk ineligible for renewal.

(3) If there are physical or risk changes to the insured property beyond the catastrophe-damaged condition of the structures and surface landscape that result in the property becoming uninsurable.[1]

In California, the threat of fires is always around. Having something like this may protect your policy but it makes it tricky to insure in the state. Consult your provider on what should be in your policy.

[1] https://codes.findlaw.com/ca/insurance-code/ins-sect-675-1.html#:~:text=(b)(1)%20An%20insurer,solely%20on%20the%20fact%20that

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