California wildfires: What is required versus what is requested, and why it matters


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The Bulletin, authorized by California Insurance Code section 675.1(b)(2), is not the focus of this Alert. The Notice is strictly informational and has no force of law, but contains a request for insurers to consider. The following breaks out the requested voluntary action from the legally required actions/prohibitions. Like the Bulletin, the Notice is addressed only to “Admitted and Non-Admitted Insurers Writing Residential Property Insurance in California,” so it does not apply to other regulated or licensed individuals or entities. Request The Notice asks insurers to forego any pending nonrenewals and cancellations. This request covers any notice of cancellation or nonrenewal issued before January 7, 2025, but which is not yet effective, subject to certain exceptions summarized below. The rationale for the request is to provide “stability” for affected communities, although no stated legal consequence attaches to an insurer declining the request. The Commissioner does stipulate, however, that any voluntary accommodation or compliance must be offered on a nondiscriminatory basis, without considering claims experience. Requirements Both the Bulletin and the Notice summarize legal requirements in California Insurance Code section 675.1. One-Year Moratorium. There is a one-year moratorium on cancellations and nonrenewals within any ZIP Codes deemed by the Commissioner to be within or adjacent to the fire perimeter, but only if the cancellation or nonrenewal is “based solely on the fact that the insured structure is located in an area in which a wildfire has occurred.” Cancellations and nonrenewals for other valid reasons remain permissible even in these ZIP Codes. Note that Insurance Code sections 330-339 (Concealment) and 675.1(c) (gross negligence, unrelated losses, unrelated physical or risk changes) provide non-exhaustive examples of when a cancellation or nonrenewal would not be based “solely” on the location of a property. Mandatory Renewals After Total Loss. Insurers must make offers of renewal for at least 24 months after a total loss caused by a declared disaster, with policy and premium adjustments for any changes to the exposure to loss. Premium Payment Grace Period. Insurers must provide a 60-day grace period for premium payments during a declared state of emergency and for 60 days thereafter. __________ If you have any questions about this Legal Briefing, please feel free to contact Dan Brown or the Eversheds Sutherland attorney with whom you regularly work. The materials on the Eversheds Sutherland website are for general information purposes only and do not constitute legal advice. While reasonable care is taken to ensure accuracy, the materials may not reflect the most current legal developments. Eversheds Sutherland disclaims liability for actions taken based on the materials. Always consult a qualified lawyer for specific legal matters. To view the full disclaimer, see our Terms and Conditions or Disclaimer section in the footer. 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On January 9, the California Insurance Commissioner simultaneously published Bulletin 2025-1 and Notice 2025-1. The Bulletin, authorized by California Insurance Code section 675.1(b)(2), is not the focus of this Alert. The Notice is strictly informational and has no force of law, but contains a request for insurers to consider. The following breaks out the requested voluntary action from the legally required actions/prohibitions. Like the Bulletin, the Notice is addressed only to “Admitted and Non-Admitted Insurers Writing Residential Property Insurance in California,” so it does not apply to other regulated or licensed individuals or entities.

Request

The Notice asks insurers to forego any pending nonrenewals and cancellations. This request covers any notice of cancellation or nonrenewal issued before January 7, 2025, but which is not yet effective, subject to certain exceptions summarized below. The rationale for the request is to provide “stability” for affected communities, although no stated legal consequence attaches to an insurer declining the request. The Commissioner does stipulate, however, that any voluntary accommodation or compliance must be offered on a nondiscriminatory basis, without considering claims experience.

Requirements

Both the Bulletin and the Notice summarize legal requirements in California Insurance Code section 675.1.

One-Year Moratorium. There is a one-year moratorium on cancellations and nonrenewals within any ZIP Codes deemed by the Commissioner to be within or adjacent to the fire perimeter, but only if the cancellation or nonrenewal is “based solely on the fact that the insured structure is located in an area in which a wildfire has occurred.” Cancellations and nonrenewals for other valid reasons remain permissible even in these ZIP Codes. Note that Insurance Code sections 330-339 (Concealment) and 675.1(c) (gross negligence, unrelated losses, unrelated physical or risk changes) provide non-exhaustive examples of when a cancellation or nonrenewal would not be based “solely” on the location of a property.
Mandatory Renewals After Total Loss. Insurers must make offers of renewal for at least 24 months after a total loss caused by a declared disaster, with policy and premium adjustments for any changes to the exposure to loss.
Premium Payment Grace Period. Insurers must provide a 60-day grace period for premium payments during a declared state of emergency and for 60 days thereafter.

__________

If you have any questions about this Legal Briefing, please feel free to contact Dan Brown or the Eversheds Sutherland attorney with whom you regularly work.

The materials on the Eversheds Sutherland website are for general information purposes only and do not constitute legal advice. While reasonable care is taken to ensure accuracy, the materials may not reflect the most current legal developments. Eversheds Sutherland disclaims liability for actions taken based on the materials. Always consult a qualified lawyer for specific legal matters. To view the full disclaimer, see our Terms and Conditions or Disclaimer section in the footer.