San Francisco Chronicle · Megan Fan Munce · September 9, 2026
California lawmakers passed several bills aimed at remedying problems in California's home insurance market -- even as they postponed resolving complex questions surrounding the balance between insurance companies' and electric utilities' payouts when the latter's equipment sparks wildfires.
The utility reforms died on the final day of the session, but the other insurance bills are headed to the desk of Gov. Gavin Newsom, who has until Sept. 30 to sign them into law.
The slate of legislation touches everything from increasing fines when insurers break the law to giving policyholders more notice before they lose coverage. Many of the bills were helmed by Southern California legislators who represent communities that have burned in wildfires.
"Consumers play by the rules, and insurance companies should too," Insurance Commissioner Ricardo Lara, who sponsored several of the bills, said in a statement.
Here are the potential changes you should know about:
Combating underinsurance
In the wake of catastrophic wildfires, many homeowners learn for the first time that they were underinsured -- meaning their insurance policies will not cover the full cost of rebuilding their home and replacing their belongings.
This was especially true of the Los Angeles County wildfires, when homeowners battled a lack of contractors, inflation and tariffs on materials like lumber. A Chronicle investigation published last year documented how underinsurance has prevented many California wildfire survivors, and their communities, from rebuilding and recovering.
Senate Bill 876 by state Sen. Steve Padilla, D-Chula Vista (San Diego County), aims to take a bite at the problem in multiple ways.
It would require that insurers offer at least 50% extended replacement cost coverage for both a home's structure and a type of coverage known as additional living expenses, which covers costs like rent and food when a policyholder's house is uninhabitable. The extended replacement cost coverage would allow policyholders to exceed their policy limit by up to 50% if base limit alone weren't enough to cover their costs. Many insurers already offer extended replacement cost coverage in varying amounts.
The bill would also require all insurance companies to provide policyholders with an estimate of what it would take to replace their home. Existing regulations already require insurers to do so, but the bill would eliminate some exceptions to the rule -- including by explicitly requiring the California FAIR Plan provide homeowners with such an estimate.
Amy Bach, executive director of the consumer advocacy group United Policyholders, said the minimum 50% extended replacement cost is something consumer advocates and the California Department of Insurance have spent years lobbying for.
"Unfortunately, the risk is higher going forward than the world we live in now, so we want to be sure that people who are paying premiums are covered," Padilla told the Chronicle. "That's what this is really about, is helping people rebuild."
Penalties for legal violations and late payments
On top of its provisions to address underinsurance, SB876 would also double penalties the California Department of Insurance could levy against insurance companies when regulators say an insurer violated state law during a state of emergency.
This summer, the department released a report alleging the state's largest insurer, State Farm General Insurance Co., had violated state law nearly 400 times in its response to the Los Angeles County wildfires. State Farm has said it has paid back policyholders who faced issues, which the insurers attributed to claim-specific rather than widespread practices. Regulators say the final fine could be the largest in state history.
SB876 would also require insurers to pay restitution directly to policyholders going forward who were harmed by the alleged legal violations.
A separate bill -- Senate Bill 878 by state Sen. Sasha Perez, D-Alhambra (Los Angeles County) -- would apply interest penalties to insurance companies when they delay paying out claims.
In the event of a home being completely destroyed, SB878 would require insurance companies to pay the depreciated value of the home, known as its actual cash value, within 30 days with limited exceptions. If an insurer did not make such a timely payment, the bill would require the company to begin paying the policyholder interest on the claim.
Transparency in claims-handling
Another of Perez's bills, Senate Bill 877, aims to increase transparency on how insurance companies decide what to pay in claims.
The Chronicle's investigation documented how some insurance companies and insurance claims handlers, known as adjusters, avoid giving homeowners the exact estimates used to determine how much their claim is worth. This behavior occurred even after insurance policyholders cited memos by the Department of Insurance mandating insurance companies give all copies of estimates to their policyholders.
SB877 codifies the requirement that insurers provide policyholders, upon request, all preliminary and final documents used to determine whether damage is covered and, if so, how much it was worth. If a policyholder requested such documents, the insurance company would have 15 days to respond.
More notice before dropped coverage
California law currently requires insurance companies to notify policyholders they're being non-renewed at least 75 days before their policy expires.
Consumer advocates say this window often doesn't leave enough time for homeowners to complete work on their home -- such as upgrading outdated electrical systems or installing a new roof -- that could keep them from losing coverage.
Senate Bill 1301, authored by state Sen. Ben Allen, D-Santa Monica, would extend that notice period to 90 days.
If the insurer determined that the homeowner would be able to fix the reason they were being dropped, then SB1301 would require the insurer to give the policyholder 120 days notice and a minimum of 90 days to remedy the issue.