California Gov. Gavin Newsom signed the largest package of residential property insurance changes the state has passed in years on Sunday, Sept. 27 — and vetoed two bills that would have forced insurers to explain and pay claims faster.
The actions were disclosed in the governor’s legislative update for Sept. 27, which listed 222 bills signed and 43 vetoed. Several of the signed measures rewrite the rules that govern how homeowners in the country’s most fire-exposed housing market buy, keep and collect on a policy.
What the new laws require
The centerpiece is SB 876 by Sen. Steve Padilla, D-San Diego, chaptered as Chapter 656. According to the Legislative Counsel’s digest, it requires policies to offer at least 50% extended replacement cost coverage above policy limits for eligible insureds, requires full building code upgrade costs to be covered when a total-loss homeowner rebuilds at a new location, and expands additional living expense coverage to all reasonable costs of maintaining a comparable standard of living, with a 24-month minimum for losses in a declared state of emergency.
It also sets service deadlines: a primary point of contact assigned within 30 days on emergency claims, and a status report within 15 days of any subsequent adjuster assignment. Civil penalties for unfair practices tied to declared emergencies rise to a range of $10,000 to $20,000 per act. The provisions become operative Jan. 1, 2028.
SB 1301 by Sen. Benjamin Allen, D-Santa Monica, Chapter 693, goes at the problem agents hear about most: nonrenewal. Beginning Jan. 1, 2028, its digest requires an insurer to deliver a nonrenewal notice at least 90 days before the policy expires, to explain the grounds, and to hand over “all nonaerial imagery relied upon as a basis for the decision,” plus inspection reports on request within 15 days.
Where a policy fails underwriting guidelines because of a fixable condition, the insurer must give notice at least 120 days out and allow no less than 90 days to remedy it. The bill also bars nonrenewal based solely on roof age when an independent inspection finds at least five years of useful life remaining, and on certain unpaid claims or claim-inquiry history. Insurers begin filing annual reports April 1, 2029, with the Department of Insurance publishing aggregated data each Sept. 1.
Two bills by Assemblymember Lisa Calderon, D-Whittier, target the California FAIR Plan, the insurer of last resort whose rolls have swelled as carriers retreat. AB 1680, Chapter 540, lets the insurance commissioner order corrections and impose penalties of up to $10,000 per act, or $20,000 if willful, and authorizes the commissioner to require adjusted policy limits and added fair rental value options in the renters program. From Jan. 1, 2028 it also creates a clearinghouse: the FAIR Plan may share policyholder information with participating insurers so they can offer private-market coverage, with notice and an opt-out, and those insurers must report quarterly on policies written for former FAIR Plan customers. AB 69 separately revises FAIR Plan policy notices and renewals.
The two vetoes
Newsom rejected SB 877 and SB 878, both by Sen. Sasha Renée Pérez, D-Pasadena. SB 877 would have expanded the claim-related documents an insurer must hand a claimant on request to include “all valuation, measurement, and loss adjustment calculations, whether preliminary or final,” with delivery required within 15 calendar days. SB 878 would have set deadlines for paying claims and attached penalties for delay. The Legislature’s records show both were vetoed Sept. 27; the SB 877 and SB 878 veto messages are posted on the governor’s site.
CalMatters, which reported on the vetoes Sept. 29, said Newsom’s messages described the bills as codifying existing regulations and “unnecessary at this time,” pointing to rules already adopted by Insurance Commissioner Ricardo Lara. Consumer Watchdog’s Carmen Balber told the outlet the commissioner’s regulations do not address the claims-handling delays and underpayments the two bills targeted, calling the vetoes “a real black mark on the governor.”
The gap the vetoes leave is not theoretical. RealtyWire reported in August on an analysis estimating insurers earn $8.8 million a day on delayed homeowner claims — the float that payment-deadline bills are written to eliminate.
Why it travels beyond California
California is where the national property insurance problem shows up first and largest, and its statutory language tends to migrate. Texas and Florida regulators have moved on premiums and litigation in the past two months, and RealtyWire covered an earlier tranche of California measures on Sept. 16 that doubled fire-survivor mortgage forbearance to 24 months and set rules for smoke-damage claims.
For agents and lenders, the operative changes are the 90- and 120-day nonrenewal notices and the FAIR Plan clearinghouse, both of which reshape what a buyer can find out about insurability before closing. Neither takes effect until 2028, which leaves two more renewal cycles under the current rules. Additional housing market coverage is here.
