Early last year, California enacted Senate Bill 824 (codified as section 675.1(b)(1) of the California Insurance Code), which serves to prohibit insurers from canceling or non-renewing policies of residential property insurance placed on homes located in certain ZIP codes for a year after the declaration of a state of emergency related to a California wildfire. The statutory provision also requires the California Insurance Commissioner to issue a bulletin informing insurers of the ZIP codes subject to the moratorium.
This month, Commissioner Ricardo Lara did just that by releasing Bulletin 2020-11 (the “Bulletin”) and a corresponding press release that once again notifies insurers of the one-year moratorium and sets forth the ZIP codes that are off limits in terms of notices of cancellation or non-renewal due to wildfire risk. In this alert, Michelman & Robinson explains how the Bulletin (not to be confused with a similar bulletin the Commissioner sent out last year) affects insurance companies and insureds, alike, and when the moratorium effectively began.
Q. What does the Bulletin provide?
A. Simply put, the Bulletin acts as a notice to insurers explaining that they are precluded from cancelling or non-renewing policies of residential property insurance held by insureds in certain ZIP codes within California for one year. Of note, it is the statutory provision (section 675.1(b)(1) of the California Insurance Code), not the Bulletin, that triggers this prohibition upon the Governor declaring a state of emergency due to wildfire(s).
Q. When does the moratorium begin?
A. It is important to stress that for many insurers, the Bulletin is their first notice of the requirements of the moratorium. Nonetheless, the effective date of the one-year prohibition is the date the Governor declares a wildfire-related state of emergency, not the date of the Bulletin itself. As such, insurers may find themselves in the position of having already issued cancellation or non-renewal notices and now having to retract them.
Q. Who does the Bulletin affect?
A. According to Commissioner Lara, the Bulletin impacts more than 2 million policyholders affected by wildfires. The specific ZIP codes covered by the moratorium, along with the corresponding effective dates (based on the declaration of each state of emergency to date), are listed in the Bulletin.
Q. Under what authority is Commissioner Lara acting?
A. The Bulletin issued by Commissioner Lara comes in the wake of Governor Newsom’s four separate state of emergency declarations made in August and September of 2020, all of which relate to several wildfires that ravaged California. The Commissioner’s action is pursuant to the law (section 675.1 of the California Insurance Code), which requires him to notify insurers of the moratoria that began on the date of each respective state of emergency and end one year later (e.g., in August and September of 2021, depending on the particular wildfire, state of emergency, and ZIP code).
Q. Who should insurers contact for information regarding the Bulletin?
A. The Bulletin directs all insurers with questions to contact Risa Salat-Kolm, an attorney within the enforcement bureau of the California Department of Insurance. She can be reached by email at email@example.com. Of course, carriers can also reach out to the insurance professionals at M&R for advice and counsel.
In the meantime, we will continue monitoring Commissioner Lara’s office for news on this and any future bulletins he may issue down the road.
This blog post is not offered, and should not be relied on, as legal advice. You should consult an attorney for advice in specific situations.