When a wildfire destroys homes, the financial fallout doesn't end when the flames die down. For many homeowners, one of the biggest risks comes later, when they lose insurance coverage just as rebuilding begins.

California is now trying to give residents more breathing room. Gov. Gavin Newsom signed a bill that gives homeowners more time under key post-disaster insurance safeguards, though an important coverage question is still unresolved for some families affected by the Eaton Fire.

Here's what to know

As Pasadena Now reported, John Harabedian, a Democrat from Pasadena who represents the Altadena area, wrote the bill, and Newsom signed it Wednesday. It's set to take effect Jan. 1.

Under existing rules, insurers can't cancel a policy or decline to renew it for one year after a declared state of emergency if the home is in a ZIP code inside or bordering a wildfire's perimeter and the only reason is its location. The bill doubles that to two years.

Owners whose primary home is a total loss from a disaster get more time, too. When certain conditions are met, current law requires insurers to renew the policy for at least two annual renewals and 24 months after the loss, and the new law raises that to at least three renewals and 36 months.

After the Eaton Fire, the state Department of Insurance applied the one-year rule to 31 ZIP codes. Insurers couldn't send cancellation or nonrenewal notices based on wildfire risk in those areas for a year, starting Jan. 7, 2025, the day Newsom declared an emergency.

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More background

Harabedian has tied the bill to the Eaton Fire. The fire-related moratorium was already over by Feb. 18.

During the Assembly Insurance Committee's hearing that day, he said his office had heard informal accounts of policies not being renewed in Altadena and the Palisades, per a transcript from CalMatters' Digital Democracy. A department official said the agency monitors for jumps in nonrenewals after a moratorium lifts and hadn't seen one in any particular area.

Insurance Commissioner Ricardo Lara pointed out that people whose homes were total losses already had two years of protection. For homes destroyed in January 2025, that window closes in January 2027, the same month the new law takes effect.

The bill digest doesn't say whether homeowners who lost their homes in January 2025 would qualify for the 36-month protection.

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Where can I learn more?

Insurance trouble tied to wildfire risk has reached homeowners across California.

• Officials took unprecedented action after major insurers dropped homeowners in high-risk wildfire areas.

• In Los Angeles, homeowners were left without coverage before the Palisades Fire struck.

• A couple lost coverage one month before a wildfire destroyed the home State Farm had insured.

• Across the state, homeowners faced 400% insurance rate hikes as companies kept dropping coverage.

• One insurer stopped offering coverage to new homeowners in California as wildfire risk grew.

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