California steps back from mandating insurers offer coverage

For the fourth time since 2020, California's Legislature has declined to require insurers to cover homeowners who take concrete steps to reduce wildfire risk on their properties - a pattern of failure that has deepened industry tensions with state government even as more than 400,000 policyholders have lost private coverage since 2021.

The Senate Insurance Committee voted down SB 1076, the Insurance Coverage for Fire-Safe Homes Act, on Monday, delivering a significant defeat to Sen. Sasha Renée Pérez (D-Pasadena), whose district encompasses the Eaton fire zone - among the areas hardest hit by the catastrophic January 2025 wildfires that damaged or destroyed more than 18,000 structures and killed 31 people.

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The bill fell one vote short. Three senators voted to advance it, including committee chair Sen. Steve Padilla (D-Chula Vista), while two members, Sen. Laura Richardson (D-San Pedro) and Sen. Susan Rubio, abstained - a procedural equivalent of a no vote in California's committee system.

An industry line that held

At its most ambitious, SB 1076 would have required admitted insurers to offer and renew coverage to any California homeowner whose property met wildfire-safety standards set by the insurance commissioner, beginning Jan. 1, 2028. Insurers who repeatedly refused to comply, or who withdrew from the state rather than write such policies, would have faced a five-year ban on selling home and auto insurance in California.

Facing fierce opposition from the industry, Pérez had already amended the bill significantly, replacing the broad mandate with a framework for community-wide pilot projects across the state to identify the most effective ways to reduce property and insurance losses from wildfires. Under that revised version, insurers would have been required to offer four years of coverage to homeowners in communities where the pilots were judged successful.

Even that concession was not enough. Denni Ritter, a vice president of the American Property Casualty Insurance Association, told the committee that her trade group's opposition remained unchanged. The amended bill, she said, retained "the same core flaw - substituting underwriting judgment and solvency safeguards with a statutory mandate to accept risk."

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Richardson, in voting against the bill, struck a more ideological note. "Last I heard, in the United States, we don't require any company to do anything," she said. "That's the difference between capitalism and communism, frankly."

A pattern of defeat

The defeat of SB 1076 was not an isolated event. According to an analysis by the Senate insurance committee's own staff, this was the fourth consecutive failure of legislation requiring insurers to cover fire-hardened homes since 2020 - a legislative record that illustrates the durability of industry opposition even in the face of mounting crisis.

Earlier attempts include SB 1060, which would have required insurers to incorporate wildfire mitigation measures - such as defensible space and home hardening - into their underwriting risk models. That bill was pulled before a final vote after it became clear it lacked the numbers, with the insurance industry arguing it was unworkable and that the necessary data was unavailable. Assembly Bill 2416, introduced around the same period, would have required insurers to offer discounts to homeowners who demonstrated home hardening; it also failed.

In 2023, broader reform legislation aimed at persuading insurers to remain in California collapsed at the end of the legislative session without a deal, despite negotiations involving the governor's office, the insurance commissioner, and legislative leaders.

A 2022 investigation found that state senators who voted against similar bills had collectively received more than $4 million from insurance-related industries. 

The FAIR Plan's expanding shadow

The political stakes are set against a deteriorating market. California's FAIR Plan enrollment jumped 43% between September 2024 and December 2025, following a run of catastrophic fires including the LA fire that destroyed 12,000 homes.

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A Los Angeles Times analysis found that in the Palisades and Eaton fire zones alone, FAIR Plan enrollment nearly doubled from 14,272 to 28,440 between 2020 and 2024. Statewide, the number of FAIR Plan dwelling policies more than doubled over four years, from 202,897 to 451,799, while the total exposure covered rose to $458 billion - almost triple the 2020 figure. 

The FAIR Plan was designed as a bare-bones backstop, not a primary market. Its policies offer limited coverage, exclude water damage, theft, and liability, and are considerably more expensive than standard homeowners' insurance. The FAIR Plan recently proposed an average rate increase of 35.8% for home insurance - which, if approved, would be its largest in at least seven years, with about half of policyholders expected to see increases between 40% and 55%. 

Following the Palisades and Eaton fires, the FAIR Plan ordered member insurers - including State Farm, Allstate, and Chubb - to contribute $1 billion to shore up reserves. Just three months into 2025, little cash remained if another disaster struck.

Insurers have cited California's heavily regulated rate environment as a central reason for their retreat. Prior-approval rules under Proposition 103 can mean it takes a year or more for carriers to secure rate increases - a lag that erodes the value of any approved increase before it takes effect. Regulators have promised faster reviews and have allowed carriers to use forward-looking catastrophe models in rate filings for the first time, but the industry says these reforms are not moving quickly enough.

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"The insurance market right now is in a fragile state," said Mark Sektnan, vice president for state government relations at the American Property Casualty Insurance Association. "The decisions that the legislature makes through the laws that they pass could make California either appear to be a more encouraging market or less encouraging market for insurers wanting to come back." 

Bills that passed and what they do

The same committee session that killed SB 1076 advanced several other measures that will directly affect claims and policy practices.

SB 877, also authored by Pérez, requires insurers to provide greater transparency in the claims process - a response to widespread complaints from fire survivors about delayed and contested payments. SB 878 imposes financial penalties on insurers who miss claims payment deadlines. A companion measure, Senate Bill 876, would mandate upfront payments and double the limits on additional living expense coverage  - a provision aimed at homeowners displaced for years during rebuilding.

SB 1301, authored by Sen. Ben Allen (D-Pacific Palisades) - an insurance commissioner candidate whose own community was devastated in January 2025 - passed the committee and moves to the Senate Appropriations Committee. The bill would require insurers to give six months' advance notice before non-renewing a policy, provide specific and documented reasons for the non-renewal, and prohibit insurers from non-renewing a policy simply because a homeowner asked about a potential claim or filed a claim that was ultimately denied. 

California is also pursuing new standards for smoke damage claims. Assembly Bill 1795, backed by Insurance Commissioner Ricardo Lara, would establish the country's first formal standards for inspecting, testing, and restoring smoke-damaged properties, setting uniform claims practices and guidelines for when it is safe for residents to return.  Regulators and litigators in other wildfire-exposed states are watching the proposal closely as a potential reference point for their own frameworks.

Also failing Monday was SB 982, authored by Sen. Scott Wiener (D-San Francisco), which would have authorised California's attorney general to sue fossil fuel companies to recover losses from climate-induced disasters. The oil and gas industry opposed the measure.

The broader market calculation

Polling by Hart Research and FM3 Research found that 85% of voters surveyed believed home insurers should be required to cover homeowners who meet state fire safety guidelines. Live Insurance News Supporters of SB 1076 drew an explicit parallel to California's auto insurance framework under Proposition 103, which requires insurers to offer a good-driver discount policy to qualifying drivers - arguing that a similar public-benefit rationale applied to fire-safe homes.

A coalition of 40 organisations urged passage of the bill, including wildfire survivor networks in Altadena and Pacific Palisades, the California Nurses Association, Consumer Watchdog, the Consumer Federation of America, and the Center for Biological Diversity. Former California Insurance Commissioner Dave Jones was among the signatories. The coalition cited data suggesting that 70% of Los Angeles fire survivors reported that insurance delays and underpayments were impeding their recovery. 

The insurance industry's counterargument - that statutory underwriting mandates threaten solvency and undermine the actuarial underpinnings of the market - has so far prevailed in Sacramento. Commissioner Lara has separately outlined plans for a home-hardening grant programme to provide financial assistance for low-income residents to install fire-resistant roofs and create defensible space - a voluntary incentive approach the industry has not opposed. 

Whether that approach can meaningfully reduce FAIR Plan enrollment, or restore private market capacity in fire-prone communities, remains to be seen. The defeat of SB 1076 closes one chapter in California's long-running confrontation between legislative ambition and insurance market realities - but the structural pressures that produced it show no sign of easing.