Insurance commissioner issues moratorium on home policy cancellations in fire zones

California's Insurance Commissioner, Ricardo Lara, has put in place a moratorium which prevents insurance companies from canceling or refusing to renew home insurance policies in the Pacific Palisades and the Eaton fire zones of the San Gabriel Valley.

The program safeguards homeowners living within the fire area and in adjacent ZIP codes from losing their insurance policies for one year, effective from the day Governor Newsom declared a state of emergency on Wednesday.

Moratoriums, which are issued according to state law, are usually given out after large fires and cover all policyholders, regardless of whether they had property damage.

Lara also recommended that insurance companies delay for six months any pending non-renewals or cancellations issued 90 days prior to January 7 that were set to take effect after the start of the fires - something he is unable to prevent.

"Ladies and gentlemen, I urge all property insurance companies to immediately suspend these non-renewals and cancellations, and offer stability to our communities, enabling consumers to focus on what truly matters in these challenging times - their safety and recovery," stated Lara during a press conference in downtown Los Angeles on Friday.

They generally have a lot of flexibility to decide whether or not to renew home insurance policies after they expire, provided they give their customers at least 75 days' notice. Nevertheless, policies that are already active can only be cancelled for specific reasons, such as failure to make payments or evidence of fraud.

Triggering the need for moratoriums due to the short tenure and rent ceilings surrounding emergency accommodations could be insufficient to confront homelessness entirely.

In addition, Lara requested that insurers provide more time for policyholders affected by the fires to pay their premiums beyond the 60-day grace period that is currently mandated by state law.

It's unclear how many homeowners in Pacific Palisades and other areas lacked insurance coverage, but multiple residents reported that their insurers let their policies lapse before the disaster occurred. In 2022, State Farm informed the Department of Insurance that it wouldn't renew 1,626 policies in Pacific Palisades when they expired, starting the previous July.

Visit insurance.ca.gov to determine if their ZIP code is included in the current moratorium. If they suspect their insurer is violating the law, they can reach the department by calling (800) 927-4357 or by using the chat or email feature.

A fire in Pacific Palisades, California's most destructive wildfire in Los Angeles history, had grown to more than 20,000 acres by Friday. Thus far it had destroyed 5,000 houses, businesses, and other structures, leaving only 6% of the burned area under control.

The blaze, known as the Eaton fire, has been ravaging Altadena and Pasadena, consuming many structures and burning approximately 14,000 acres. By early Friday, authorities reported that only 3% of the fire was under control. As of this reporting, ten lives have been lost.

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