California SB 1076: New Legislation Mandates Wildfire Insurance Coverage
A legislative proposal introduced in California aims to mandate that insurers provide coverage to homeowners implementing measures to safeguard their properties against wildfires. This proposed legislation, known as SB 1076, has been put forward by state Senator Sasha Renée Pérez. Under this bill, insurers would be obligated to offer and renew insurance policies for homes that adhere to wildfire-prevention standards set by the insurance commissioner, effective January 1, 2028.
The bill outlines consequences for non-compliant insurers, including a potential five-year prohibition from participating in the state’s auto and home insurance markets. It also specifies that insurers opting out of offering property insurance under the new law could face the same market exclusion for five years. However, insurers may request a temporary waiver if they can demonstrate an excessive concentration of risk in certain geographical areas.
Addressing Past Concerns and Market Challenges
Senator Pérez's initiative is driven by concerns raised by individuals affected by the Eaton Fire in early 2025, who expressed worries over insurance availability despite adhering to fire safety protocols. Pérez emphasized the need to provide assurances to homeowners rebuilding with fire-resistant measures, stating, “To help fire survivors return home, we need assurance that newly built, wildfire-resilient homes will receive insurance coverage.” This sentiment was echoed by Carmen Balber, executive director of Consumer Watchdog, who noted the urgency of addressing significant insurance market challenges due to policy cancellations.
The bill is co-sponsored by the Eaton Fire Survivors Network, a regional advocacy group representing residents in areas impacted by wildfires. It builds on previous legislative attempts to require coverage for homeowners mitigating risks, although a similar measure in 2023 did not advance.
Industry Response and Regulatory Implications
Industry response to the bill has been mixed. The Personal Insurance Federation of California has expressed concerns, arguing that enforced coverage in high-risk zones could lead to market withdrawal and exacerbate existing challenges, especially in the homeowners and auto insurance sectors. Rex Frazier, president of the Federation, warned that the proposed stipulations could financially burden insurers, potentially triggering broader market disruptions.
The American Property and Casualty Insurance Association is also reviewing the bill. Mark Sektnan, vice president for state government relations, emphasized the need for policymakers to carefully consider the bill’s implications, cautioning that new mandates might intensify current market pressures.
Proposed Mechanisms and Future Monitoring
The bill’s criteria for fire safety follow guidelines initially outlined in the 2021 Safer from Wildfires program, offering mechanisms like fire-resistant construction materials and defensible space management. Proponents anticipate these standards will inform new implementations under SB 1076. Additionally, Senator Pérez has introduced two complementary insurance-related bills aimed at enhancing claim transparency and enforcing timely insurance payouts.
As the bill progresses, stakeholders within the insurance industry continue to monitor its potential impacts on operations and market dynamics. Compliance and risk management strategies are expected to evolve as insurers adapt to regulatory demands and underwriting challenges posed by wildfire risks.