New Insurance Law Targets the Challenges of Rebuilding After Disaster
California’s Disaster Recovery Reform Act addresses coverage options, claims communication and insurer accountability, with major changes beginning in 2028.
After a wildfire, the questions facing a household can quickly become overwhelming. Where will we live? What will rebuilding cost? Who can explain what our insurance will cover?
For mountain residents, those questions give a newly signed California insurance law a practical connection to life close to wildfire country.
Gov. Gavin Newsom approved Senate Bill 876 on September 27. Known as the Disaster Recovery Reform Act, the legislation addresses several parts of the recovery process, including coverage options and communication between insurers and policyholders. Its provisions become operative January 1, 2028. Official legislation.
The Department of Insurance says the measure responds to complaints from wildfire survivors about obstacles to recovery. State Sen. Steve Padilla authored the bill, which was sponsored by Insurance Commissioner Ricardo Lara. Department announcement.
Under the new requirements, insurers must offer eligible homeowners extended replacement-cost coverage of at least 50% above their dwelling coverage limit. That is an offer of additional protection, rather than an automatic increase in every policy.
The law also requires an offer of extended additional-living-expense coverage for homeowners policies with dollar limits on that protection.
Communication requirements address another potential frustration: knowing whom to contact. For residential claims related to a declared emergency, insurers must assign a primary contact within 30 days of receiving notice of the claim. If that contact changes, a written status report is required within 15 days.
The legislation also doubles maximum penalties for specified unfair insurance practices related to a state of emergency and requires insurers to submit disaster-response plans. Read SB 876.
For communities where wildfire preparedness is part of everyday life, recovery deserves attention alongside evacuation plans and defensible space. These changes focus on what happens after a covered loss—when families begin the work of finding temporary housing, understanding their coverage and deciding how to rebuild.
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Feature Photo: Residential destruction in Paradise, California, photographed in July 2019, eight months after the Camp Fire.
Photo Credit: Frank Schulenburg / Wikimedia Commons, CC BY-SA 4.0. cropped
