California Offers Home Insurance Band-Aid as Fires Continue to Rage

The insurance markets in climate-vulnerable places was already teetering. California’s government is well aware that the apocalyptic fires still burning in the Los Angeles area are the sort of thing that could push the whole industry over the edge, and have offered up at least a temporary bit of relief.

The state’s Office of Insurance has issued a one-year moratorium on insurance companies trying to cancel or fail to renew policies in affected areas. In the face of such a widespread catastrophe, it’s something.

“I am using my moratorium powers to prevent insurance companies from canceling or non-renewing policies in wildfire-impacted areas, so people don’t face the added stress of finding new insurance during this horrific event,” said California’s Insurance Commissioner Ricardo Lara, in a statement on Thursday. “I am working on all fronts to make sure wildfire victims get the benefits they are entitled to, and they get it as soon as possible.”

The moratorium is specific to certain zip codes; residents can find if their homes are included at this site. It stems from a law authored by Lara when he was a state senator, and has been used for a couple of dozen fires since 2019. “This law gives millions of Californians breathing room and hits the pause button on insurance non-renewals while people recover,” Lara said previously.

Limiting the moratoria to zip codes directly affected, of course, limits its efficacy over the longer term. The overall costs of these fires are, at this point, utter stabs in the dark — we still don’t know how many homes and businesses will burn down, how much public infrastructure will require rebuilding, how many people will die or be injured and how many others both nearby and substantially downwind will end up away from work or in a hospital from breathing in the smoke. But the direct cost will, undoubtedly, be catastrophic, and insurance companies are nothing if not clear-eyed about the future risks they have the stomach to underwrite. Moratorium aside, it is hard to imagine the post-fires California market will look at all the same as it did.