Key Senate Committee Approves Daly Bill Increasing Insurance Protections for Homeowners

Thursday, August 22, 2019

Sacramento – On August 21, the California Senate Committee on Insurance approved legislation by Assemblymember Tom Daly (D – Anaheim) to increase protections for homeowners in the aftermath of a series of devastating wildfires.

Assemblymember Daly’s AB 1816 requires insurance companies to provide a 75-day notice to policyholders when they non-renew a homeowners policy. It also raises the limit on homeowners’ insurance claims covered by the California Insurance Guarantee Association (CIGA) to $1 million.

“I was pleased to receive the unanimous support of the Senate Insurance Committee for my bill, which makes several common sense reforms to the insurance laws that are impacted by the ‘new normal’ of wildfires and climate change,” Assemblymember Daly said.

The committee’s action followed another hearing earlier in the day, during which members of the Assembly Insurance Committee (chaired by Daly) heard testimony about the current insurance market and the role of the Fair Plan, California's "insurer of last resort."

California has experienced a massive increase in the loss of life and property caused by wildfires. Beginning in 2015 with a spate of fires in Lake County, wildfires have devastated communities around the state including enormous fires in Butte, Shasta, Sonoma, Napa, Ventura, Santa Barbara and Los Angeles Counties.

Among the many consequences of the losses caused by these fires are significant changes in the homeowner's insurance market in high fire risk areas.

To address existing gaps in that market, Daly’s bill will change three features of current law related to homeowners’ insurance availability and insurer insolvency:

First, it increases the minimum time period for an insurer to provide a notice of non-renewal to a homeowner. 

Second, it expands an existing incentive for an insurer to issue and renew homeowner’s policies in high risk fire areas through “write out” credits provided by the FAIR Plan.  These credits act to reduce the insurer’s exposure to any future financial assessment imposed by the FAIR Plan to ensure its solvency. 

Lastly, the bill increases the limit on claims payments made by the California Insurance Guarantee Association (CIGA). CIGA is the state mandated entity responsible for paying the claims of insolvent property/casualty insurers. 

These three elements increase protections for homeowners by providing greater notice and stronger guarantees, while providing insurers with practical incentives for renewing policies in high fire risk areas.

According to Amy Bach, executive director of United Policyholders (a non-profit advocating for homeowners), “This bill is a practical approach making it easier for homeowners in the near term while we continue working on the bigger challenges in the market.”

Anneliese Jivan, president of the California FAIR Plan Association, said the FAIR Plan “supports Assemblymember Daly’s efforts to address California’s wildfire issues. AB 1816 will provide insurance companies with incentives to write policies in the high or very high fire hazard severity zone areas.  This will help California homeowners obtain insurance coverage if they live in these areas. We appreciate Assemblymember Daly’s leadership in pushing a common sense solution for homeowners in need of insurance coverage.”

AB 1816 will be voted on by the full Senate within the next three weeks. 


Assemblymember Tom Daly represents the 69th Assembly District, encompassing the cities of Anaheim, Garden Grove, Orange and Santa Ana.