California homeowners could see discounts on their insurance policies under a proposed bill, which recently cleared the Senate floor on a 29 to 8 vote.
Authored by Sen. Josh Becker in February, Senate Bill 1060 looks to expand the list of acceptable fire mitigation protections that state insurers must offer discounts for when writing new policies.
“The devastating impacts of increasingly frequent and severe wildfires have accelerated insurance rate increases, nonrenewals, and market instability, causing an insurance crisis in California,” the Menlo Park-based Democrat said in an April analysis of the bill.
Under current California law, properties made of non-combustible materials, free of flammable debris such as wood piles, and those with mitigations that prevent embers from entering during a fire are already eligible for discounts. Homes with a buffer around them known as a “defensible space” to slow down fires also qualify, according to lawmakers.
Under SB 1060, property owners and communities who take additional measures like thinning brush near their homes, known as “hazardous fuel reduction,” would also qualify.
An earlier version of the bill would have also offered discounts for those who attend or host meetings or local events related to fire mitigation, but that provision was removed during amendments.
The latest version of the bill hasn’t received opposition, according to a May 20 Senate Floor Analysis.
Earlier in the year multiple insurance agencies sent a letter to the Senate Committee on Insurance, voicing concerns the bill could further destabilize the state’s already fragile insurance market by adding the new underwriting requirements.
“It is clear the goal of this bill is to force insurers to take on risks that are not supported by adequate rate levels and jeopardize their financial solvency,” reads a summary of the opposition in an April 22 analysis of the bill.
In the more recent Senate analysis, lawmakers noted that despite California having spent $3.7 billion since 2017 on fire safety measures, insurance availability has continued on a downward trajectory.
Mr. Becker has said those who have spent money to protect their homes should be rewarded.
According to a September 2023 report by the New York-based Insurance Information Institute, recent disaster-prone years including fires in 2017 and 2018 have cost insurers more than $2 for every $1 they took in.
In 2018, the Camp fire, the deadliest and most destructive wildfire in state history, destroyed more than 18,000 buildings in Northern California’s Butte County.
The institute said insurers haven’t been able to charge adequate premiums since voters passed Proposition 103 in 1988, establishing what’s known as the intervenor process, in which state regulators review all proposed rate increases of 7 percent or greater, possibly taking years.
But now as some of the state’s largest insurers like State Farm, All State, and Farmers have paused accepting new policies and others having entirely withdrawn from California, changes are on the horizon.
In March, Insurance Commissioner Ricardo Lara announced new rules that would allow insurers to use forward-thinking models to set rates, as natural disasters have become more frequent in recent years, where previously they could base rates only on climate data from the previous 20 years.
He also revealed in September 2023 a plan to require insurers to write at least 85 percent of their policies in high-wildfire-risk communities by the end of 2024, under what’s known as the California Sustainable Insurance Strategy meant to expand options for homeowners.
The strategy also already offers discounts to homeowners who have mitigated wildfire risks and expands Fair Plan commercial coverage to $20 million per building, helping condominiums and homeowners associations.
