California Legislature Looks at Homeowners Cancellation Warning Bill

If passed, Senate Bill 1301 will force insurance companies to explain to a homeowner why their policy isn’t going to be renewed. Once the reason is explained, let’s say for being in a high risk fire area or for having a roof that isn’t up to snuff, or any number of reasons, the homeowner then has 90 days to fix the problem before the policy can be cancelled.

California Sen. Ben Allen — a Democrat — introduced the bill. He hasn’t commented but Consumer Watchdog Executive Director Carmen Balber did.

“Consumers often have little information about the reason for the nonrenewal, and have no path to correcting a problem before their policy gets cancelled,” Balber said. “This bill gives folks more notice, a path to remediate the problem if there is one, and the ability to keep their coverage.”

Being inside a high fire risk zone is something that can’t be fixed.

“You can’t really change that,” Balber said. “This bill would not allow you to keep your coverage in that circumstance. It would require them to give you more notice in order to have more time to shop around.”

There is opposition. Concerns have risen about how the bill will make insurer secrets public, will oversimplify risk assessment methods that are quite complex and might force many insurers to leave the California insurance market.

Proponents largely base their argument research done by Stanford University in June. It found homeowners insurance has risen on average 84% since 2020. And the hikes are whether a home is located in a hot fire zone or not. Seven of the 10 largest homeowners insurers in California have either reduced or quit doing homeowners insurance business in the state.

Average deductibles have gone from $1,813 to $2,553 between late 2020 and March of this year.

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