California places one-year ban on insurers pulling coverage in fire-affected areas

Dec. 5 (UPI) -- California on Thursday placed a one-year moratorium on insurance companies canceling residents' coverage due to wildfire risks.

The ban implemented by Insurance Commissioner Ricardo Lara will last until Dec. 5, 2020, and will cover more than 800,000 residential insurance policies in ZIP codes adjacent to wildfires for policyholders who did not experience a total loss from the wildfires that have burned throughout the state in recent years.

"I am calling on insurance companies to push the pause button on issuing non-renewals for one year to give breathing room to communities and homeowners while they adapt and mitigate risks, give the legislature time to work on additional lasting solutions and allow California's insurance market to stabilize," Lara said.

California Gov. Gavin Newsom issued a state of emergency twice in October in response to wildfires, prompting the Department of Insurance to work with Cal Fire and the governor's office to determine the moratorium area.

A California Department of Insurance report from August 2018 showed that the number of homeowners who filed complaints about their plans being dropped tripled from 2010 to 2016 and complaints about premiums climbed 217 percent.

An increasing number of California homeowners have also chosen to adopt FAIR Plans, a cheaper form of insurance that exclusively provides coverage for wildfire and is intended to be supplemented with other policies.

"Home insurance is not a luxury -- it's a necessity. Yet for hundreds of thousands of Californians, it's become almost impossible to find and afford," said United Policyholders Executive Director Amy Bach.