Newsom signs fire insurance reforms but vetoes two bills addressing complaints by wildfire victims

Gov. Gavin Newsom has signed wildfire insurance reforms, but vetoed bills cracking down on claims-handling practices that drew complaints from January 2025 fire victims.

Over the weekend, Newsom signed the Disaster Recovery Reform Act by Sen. Steve Padilla, (D-San Diego), sponsored by Insurance Commissioner Ricardo Lara, as well as a bill by Sen. Ben Allen, (D-Santa Monica), which tightens regulations governing non-renewals of policies.

Padilla’s bill, SB 876, will double penalties during a declared emergency for violations of fair claims practices, require insurers to pay restitution directly to policyholders when they engage in unfair settlement practices and mandate timely status reports whenever an insurer changes adjusters, amid other provisions.

“When disaster strikes, families shouldn’t have to face a second disaster in the claims process. SB 876 modernizes laws that were written for a different era,” Padilla said in a statement.

SB 1301, the bill by Allen, who represents the Palisades fire zone, requires insurers to provide clear reasons for not renewing a homeowner policy, generally requires a 90-day notice of the decision and gives homeowners a chance to remedy any problems.

However, Newsom vetoed two bills by state Sen. Sasha Renée Pérez, (D-Pasadena), whose district includes the Eaton fire zone. The bills targeted specific claims-handling issues highlighted by the January 2025 wildfires.

SB 877 would have required insurers to provide homeowners the original loss estimates prepared by the company’s adjusters, as well as any subsequent revisions.

The bill was intended to address widespread complaints by victims of the fires that loss estimates prepared by adjusters who visited their properties were later reduced by adjusters who didn’t set foot on them.

The other bill, SB 878, would have required insurers to respond to claims in writing and pay them within 30 days, including for total losses, or pay interest that would accrue. January wildfire victims complained of long delays in getting their claims paid.

Both bills were passed with bipartisan support and without opposition from the insurance industry, while SB 878 was co-sponsored by Lara as part of a reform package that included Padilla’s bill.

However, in vetoing the bills, Newsom told the Senate in a letter that they would “codify portions of existing, unrelated regulations that are unnecessary at this time.”

Carmen Balber, executive director of Consumer Watchdog, a Los Angeles advocacy group that co-sponsored both bills, disputed Newsom’s reasoning.

She said there is nothing in the state’s insurance code that requires insurers to provide policyholders with revised loss estimates, while existing regulations requiring interest penalties for late payments are toothless.

“L.A. fire survivors experience shows that insurance companies don’t have to deny your claims payments. They only have to delay them,” she said.

Peres said in a statement that the veto will force fire victims to “wait for accountability and justice.”

“I will continue working with fire survivors to aid in their recovery and author legislation to address the needs of disaster survivors throughout California,” she said.

The American Property Casualty Insurance Association, a large industry trade group, did not respond to a request for comment on the vetoes, but voiced support for Allen’s non-renewal bill.

“These provisions will help policyholders maintain coverage and better understand an insurers decision to nonrenew the policy,” said Mark Sektnan, vice president of state government relations, in a statement.