State insurance commissioner blocks home insurers from dropping policies near Glass, LNU Lightning fires

The California insurance commissioner on Thursday issued an order prohibiting insurance companies from canceling property insurance policies for one year for people who live in or around the areas burned by the recent Glass and LNU Lightning Complex fires.

Ricardo Lara’s action will preserve property insurance coverage for 164,516 Sonoma County homeowners affected by or living close to the Walbridge and Glass fires, and another 48,438 homeowners in Napa County in the Hennessey and Glass fire areas.

About 140,000 Sonoma County property owners were included in last year’s similar one-year moratorium blocking homeowner policy cancellation for those sustaining damage and living near the 2019 Kincade fire. That cancellation freeze period after Kincade ended on Oct. 25. About 121,000 homeowners who were covered in last year’s moratorium will get another year since they reside near the 2020 burn areas.

Overall, Lara’s action will help 2.1 million California policyholders, which represents 18% of the state’s homeowner insurance market affected by the 2020 wildfire season.

“Losing your insurance should be the last thing on someone’s mind after surviving a devastating fire,” Lara said in a prepared statement. “My action gives millions of Californians breathing room and hits the pause button on insurance nonrenewals while we take additional steps to expand our competitive market.”

The insurance commissioner’s moratorium for the LNU Lightning Complex is retroactive to Aug. 18 when Gov. Gavin Newsom declared a state of emergency soon after the fire started near Lake Hennessey, while the prohibition connected with residents near the Glass fire is effective as of Sept. 28, a day after that blaze ignited in Deer Park in Napa County. Both of those blazes later spread into Sonoma County.

“The moratorium has definitely been very, very helpful to a lot of people,” said Amy Bach, executive director of United Policyholders, a San Francisco-based consumer group.

The industry had been expecting the moratorium and in a statement the Personal Insurance Federation of California and the American Property Casualty Insurance Association said it would “work collaboratively on comprehensive solutions to better account for increased wildfire risk in homeowners’ coverage, which will increase availability of insurance.”

Lara is leading an effort to solve the issue of home insurance availability as property insurers have pulled out of California’s fire-prone sections, given years of recurring wildfires. Last year, property insurers statewide dropped 235,250 policies, which was 31% more than in 2018.

Policy cancellations are occurring much more to the north in the Sierras. However, last year, insurers dropped 2,631 homeowner policies in Sonoma County, after scrapping 2,652 policies in 2018.