State lawmakers considering policy changes after L.A. wildfires
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SACRAMENTO — Nearly six months after a firestorm ravaged communities across Los Angeles, California lawmakers are crafting legislation to try to protect the state insurance program for high-risk homes from financial collapse.
A bill, AB 226, sponsored by Assemblymembers Lisa Calderon (D-Whittier) and David A. Alvarez (D-San Diego), would make the state’s insurer of last resort, the FAIR Plan, eligible for loans and bonds from the state-backed California Infrastructure and Economic Development Bank to avoid running out of money after a disaster.
Alvarez proposed the measure last year but it failed to pass. Despite receiving unanimous support in the Assembly, the bill never reached the Senate floor for a vote before the end of the 2024 legislative session.
If the measure had passed last year and been signed into law by the governor, the FAIR Plan would have had more flexibility to weather the massive number of claims filed after the January firestorms, Alvarez said.
Instead, the FAIR plan was forced to imposed an extra $1 billion in total assessments on insurers that provide homeowners policies in California. To recoup those expenses, insurance companies are expected to hike rates on homeowners through monthly surcharges.
“Had they had this option available to them ... they would not be having to hit consumers with price increases on the private market now,” Alvarez said.
AB 226 is one of many wildfire-related bills still winding their way through the slow legislative process. If passed into law, the measures would protect homeowners from price gouging after disasters, streamline the process for filing claims for lost property and offer financial protections for 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 two dozen people and became the second and third most destructive fires in state history. Legislative leaders at the time signaled for a swift, bipartisan approach to the disaster.
“Tens of thousands of our neighbors, our families and friends, they need help. This means that we need to be able to move with urgency, put aside our differences, and be laser-focused on delivering the financial resources, delivering the boots on the ground that are needed and the policy relief that is needed to get neighborhoods cleaned up and communities rebuilt,” Senate President Pro Tem Mike McGuire (D-Healdsburg) said after it passed.
California’s last-ditch home insurer, the FAIR Plan, is meant as a backup for properties deemed high-risk and uninsurable by private companies. A Times analysis found that within the Eaton and Palisades fire zones, the number of homes on the plan nearly doubled between 2020 and 2024 and the plan has become one of the state’s largest insurers.
Amid lawsuits alleging collusion between private insurers and the FAIR Plan and policyholders raising concerns about delays in payments and smoke damage investigations, lawmakers and insurance advocates have repeatedly called for better safety nets — like the one proposed in AB 226 — to keep the insurer solvent in emergencies and viable as a long-term solution to the state’s home insurance problem.
As insurers withdrew from the L.A. market, more homeowners joined the FAIR Plan. Now Jan. 7 fire victims are battling with the state’s insurer of last resort to get compensated.
This year, Alvarez was joined on the bill by Calderon, chair of the Assembly’s insurance committee. It passed through the Assembly at the beginning of March but has not yet seen its first Senate committee.
Alvarez celebrated the bill’s swift passage through the Assembly and hopes the Senate will work to do the same, “God forbid, if it has to be used because of a devastating fire this summer,” he said.
Other major wildfire bills being considered by lawmakers include:
- AB 493, which would require lenders to pay policyholders interest on disaster insurance payouts that are held in escrow. The measure, authored by Assemblymember John Harabedian (D-Pasadena) would close a loophole in existing law, which already requires interest payments on other escrowed funds.
- AB 597, also introduced by Harabedian, which would keep public insurance adjusters from gouging homeowners, especially after a natural disaster or state of emergency.
- SB 495, which would prevent insurers from requiring an itemized list of personal property losses from policyholders during a state of emergency, and would require insurers to provide extensions where reconstruction is delayed. The bill, introduced by state Sen. Benjamin Allen — who represents the Pacific Palisades and Santa Monica areas — passed a Senate floor vote on Tuesday and is headed to the Assembly.
Two Los Angeles County Superior Court lawsuits accuse dozens of California home insurers of dropping policyholders and forcing them onto the FAIR Plan — the state’s insurer of last resort — where polices cover less and cost more.
Most of the pending legislation won’t directly support survivors of the Palisades and Eaton fires but are still important to the rebuilding process, said Maryam Zar, president emeritus of the Pacific Palisades Community Council and founder of the Palisades Recovery Coalition.
The new laws would help prevent and prepare for future fires, she said, and are a show of goodwill to the communities that are suffering still.
Some other fire relief measures focus on easing the permit process for rebuilding, while others extend provisions set by Newsom during the state of emergency — easing tenancy rights for people staying in temporary housing for longer than 30 days, shortening the permit approval timeline and securing mortgage forbearance for destroyed properties for up to a year after the disaster. Others look to address staffing issues for the California Department of Forestry and Fire Protection as fire season turns into a year-round threat.
“Wildfire survivors continue to face housing insecurity, financial strain, and emotional trauma long after the immediate danger has passed,” Los Angeles County Supervisor Lindsey Horvath said in a statement. “These State bills represent a commitment to meeting people where they are — actively in recovery, rebuilding their lives, and in need of our long-term support.”
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