California Legislation Mandates Insurer Claims Handling Plans and Increases Penalties

A bill aimed at reforming disaster recovery in California was introduced on the anniversary of the Los Angeles wildfires. This legislation seeks to expedite recovery for homeowners and renters by enhancing insurance coverage and expanding consumer protections.

The proposed legislation, known as the Disaster Recovery Reform Act (Senate Bill 876), mandates that insurers develop a disaster recovery plan for managing claims during emergencies. Additionally, it proposes to double penalties for violations of insurance fair claims practices and settlement laws during declared emergencies.

California Insurance Commissioner Ricardo Lara and Senate Insurance Committee Chair Steve Padilla are the sponsors of SB 876. This initiative is a direct response to the urgent calls from wildfire disaster survivors for quicker claims payments.

According to Commissioner Lara, many wildfire survivors have reported ongoing issues accessing their insurance benefits. Common complaints include delays, denials, and miscommunication from insurance companies, which have topped the list of grievances filed with the California Department of Insurance since the January 2025 L.A. wildfires.

As of now, insurers have disbursed over $22.4 billion across tens of thousands of claims related to the L.A. wildfires, based on the latest data from the California Department of Insurance. In a related effort to assist wildfire survivors, California Governor Gavin Newsom announced that several major banks have agreed to extend mortgage relief for victims as the region continues to rebuild one year after the devastating fires.

The California Department of Insurance reports that 94% of the 42,121 policyholder claims filed have been fully or partially paid. However, Commissioner Lara emphasizes that more action is necessary to ensure successful recoveries and to foster safer communities.

SB 876 would require insurers to submit a “disaster recovery plan” for handling claims, which must be reviewed by the California Department of Insurance prior to implementation in emergency situations. This plan is intended to streamline the claims process and ensure timely responses.

Moreover, the bill aims to address the delays in payments often caused by the assignment of multiple adjusters to claims. Insurers would be required to provide status updates to policyholders within five days whenever a new adjuster is assigned to their case.

Topics
California
Carriers
Claims

A bill aimed at reforming disaster recovery in California was introduced on the anniversary of the Los Angeles wildfires. This legislation seeks to expedite recovery for homeowners and renters by enhancing insurance coverage and expanding consumer protections.

The proposed legislation, known as the Disaster Recovery Reform Act (Senate Bill 876), mandates that insurers develop a disaster recovery plan for managing claims during emergencies. Additionally, it proposes to double penalties for violations of insurance fair claims practices and settlement laws during declared emergencies.

California Insurance Commissioner Ricardo Lara and Senate Insurance Committee Chair Steve Padilla are the sponsors of SB 876. This initiative is a direct response to the urgent calls from wildfire disaster survivors for quicker claims payments.

According to Commissioner Lara, many wildfire survivors have reported ongoing issues accessing their insurance benefits. Common complaints include delays, denials, and miscommunication from insurance companies, which have topped the list of grievances filed with the California Department of Insurance since the January 2025 L.A. wildfires.

As of now, insurers have disbursed over $22.4 billion across tens of thousands of claims related to the L.A. wildfires, based on the latest data from the California Department of Insurance. In a related effort to assist wildfire survivors, California Governor Gavin Newsom announced that several major banks have agreed to extend mortgage relief for victims as the region continues to rebuild one year after the devastating fires.

The California Department of Insurance reports that 94% of the 42,121 policyholder claims filed have been fully or partially paid. However, Commissioner Lara emphasizes that more action is necessary to ensure successful recoveries and to foster safer communities.

SB 876 would require insurers to submit a “disaster recovery plan” for handling claims, which must be reviewed by the California Department of Insurance prior to implementation in emergency situations. This plan is intended to streamline the claims process and ensure timely responses.

Moreover, the bill aims to address the delays in payments often caused by the assignment of multiple adjusters to claims. Insurers would be required to provide status updates to policyholders within five days whenever a new adjuster is assigned to their case.

Topics
California
Carriers
Claims