With another year comes another fire season, and with longer fire seasons than ever before, wildfire insurance seems more important to homeowners than ever. KHTS is taking a look at several of the new California wildfire insurance laws set to take effect in 2020.

In addition to reviewing the text of the bills themselves, KHTS spoke to Santa Clarita lawyer Jeff Hacker of Hacker Law Group to provide some context and explanation of what to expect from a few of the upcoming changes to the law.

AB 38: Wildfire Compliance Disclosures

“Additional disclosures that a seller of property must deliver to a buyer, those deal with point-of-sale, at the time you’re selling it that there’s compliance with wildfire defensive space and vegetation management laws in designated high fire areas,” said Hacker.

Additionally, AB 38 establishes a five-year pilot program that requires California’s Office of Emergency Services (OES) and CAL FIRE to work together to use several different funds, including federal, to “proactively support at-risk communities by proposing the first-ever statewide fire retrofit program to help communities and owners of homes built prior to updated building codes in 2008” to improve the fire resistance their homes, businesses and public buildings and make them more likely to survive future fires, according to an October press release from Governor Gavin Newsom’s office.

Hacker noted that some parts of AB 38 go into effect in 2020, while others don’t go into effect until July 2021.

Homeowners must begin to retrofit their homes with the plan set by the State Fire Marshal if they want to sell their home in 2021.

AB 188: Fire Insurance Recovery Amount Requirements

“The measure of cash return on an insured structure and contents due to fire will be cost to build, repair or replace the structure and its contents,” said Hacker.

While the current law states that homeowners are paid the cash value of the home in the case of a complete loss, the new law instead requires that appraisers on insurance payouts take into account the cost to repair, rebuild or replace the property and the physical depreciation based on the time of the event when there is a total or partial loss, according to state documents.

AB 1816: Insurance 75-Day Notice Of Non-Renewal

To address existing gaps in that market, AB 1816 is set to change three features of current law related to homeowners’ insurance availability and insurer insolvency.

First, it increases the minimum time period for an insurer to provide a notice of non-renewal to a homeowner beginning July 1, 2020.  This portion of the bill takes effect later to allow time for the system changes that insurers must make in order to comply.

Second, it expands an existing incentive for an insurer to issue and renew homeowner’s policies in high-risk fire areas through “write out” credits provided by the FAIR Plan.  These credits act to reduce the insurer’s exposure to any future financial assessment imposed by the FAIR Plan to ensure its solvency.

Lastly, the bill increases the limit on claims payments made by the California Insurance Guarantee Association (CIGA). CIGA is the state-mandated entity responsible for paying the claims of insolvent property/casualty insurers.

Related: Upcoming California Laws Set To Impact Businesses In 2020

“As of this year, insurance companies must provide at least 75 days notice of non-renewal of a homeowner’s policy,” said Hacker. “Also this new legislation raises the limit on a homeowner’s insurance claim covered by California’s Insurance Guarantee Association to $1 million.”

According to Hacker, there is a fund called the CIGA Fund, “which steps into the shoes of an insurance company that goes insolvent, meaning it can’t pay claims or bankruptcy” to help ensure that Californians are covered even when their insurance company can’t pay.

These three elements are meant to increase protections for homeowners by providing greater notice and stronger guarantees, while providing insurers with practical incentives for renewing policies in high fire risk areas, according to state documents.

Ed. Note: Wyatt Smith contributed to this article.

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