Governor Gavin Newsom signed Senate Bill 876, known as the Disaster Recovery Reform Act, to protect homeowners and renters recovering from wildfires and other disasters. The bill speeds up insurance claim payments and doubles penalties for insurance companies that delay or stall claims.
Insurance Commissioner Ricardo Lara sponsored the bill. Senate Insurance Committee Chair Steve Padilla authored it. The law responds to wildfire survivors who complained about slow insurance payouts.
The bill requires insurers to create disaster recovery plans. The Department of Insurance will review these plans before emergencies. Insurance companies must pay claims on time and face penalties if they fall behind.
The law also demands insurers provide direct restitution to policyholders when they engage in unfair practices. Insurers must send status reports within 15 days when assigning new adjusters to a claim.
Insurers must offer extended replacement cost coverage and additional living expenses coverage. They must provide updated replacement cost estimates for new and renewing policies.
Building code upgrades now apply at the time of rebuilding, not when the loss occurred. This change ensures safer, up-to-date reconstruction after disasters.
Commissioner Lara’s office has already increased payments to wildfire survivors by over $338 million after reviewing thousands of complaints. The new law builds on earlier reforms, including expanded advance payments and wildfire mitigation grants.
Advocates say SB 876 addresses long-standing issues of underinsurance and claim delays. Amy Bach, Executive Director of United Policyholders, calls the bill a major step forward. She expects other states to use it as a model.
The Disaster Recovery Reform Act will take effect January 1, 2027. If you have insurance and live in high-risk areas, this law aims to speed your recovery and hold insurers accountable. How prepared is your insurance company for disaster claims?
