After Declaration of Emergency—Mandatory Moratorium on Cancellations and Non-Renewals of Residential Property Insurance

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By Julia Zeigler

On September 20, 2021, Department of Insurance Commissioner Ricardo Lara issued a “bulletin” to announce the mandatory moratorium on cancellations and non-renewals of policies of residential property insurance. His announcement follows another year of record-breaking wildfires in California. Officials said the increased activity is being driven by hot, dry conditions, as well as by shifting jetstreams.

The wildfires in California have caused obstacles for homeowners and renters to find and keep dwelling insurance.   Lara has repeatedly invoked the law imposing a one-year moratorium on policy cancellations for property in or next to major fire sites. The newest bulletin release extends the moratorium to numerous zip codes to respond to some recent fires in new geographic areas—including the enormous Dixie fire and the Caldor fire in the South Lake Tahoe area.

Lara’s Bulletin states that “due to the Governor’s September 7, 2021 emergency declaration, no insurer shall cancel or fail to renew a policy based on wildfire risk for one year after this date (until September 7, 2022).  However, what are the implications for long-run home insurance coverage, particularly given the continuing danger of wildfires.  For the Department, questions may also center on the status of a “bulletin” without the rulemaking required by the California Administrative Procedure Act.

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