Aerial shot of a community devastated by the California wildfires

California Enacts Sweeping Home Insurance Reforms to Confront Wildfire Crisis

California is taking bold new steps to address its deepening home insurance crisis. Governor Gavin Newsom has signed a comprehensive package of reforms designed to make wildfire recovery faster, fireproofing more affordable, and the state’s insurance safety net more stable.

The move comes as thousands of California homeowners in high-risk fire zones continue to face skyrocketing premiums, canceled policies, and growing uncertainty. While these latest laws may not solve the crisis overnight, they represent a meaningful step toward rebuilding trust and stability in the state’s insurance market.

Expanded Fire-Safe Grants for Homeowners

Under Assembly Bill 888, California will launch a new grant program to help low- and middle-income homeowners fortify their properties against wildfires.

These grants can cover major fireproofing improvements that can make homes safer and potentially lower insurance premiums, including everything from installing ember-resistant roofs to clearing vegetation and creating defensible space.

To qualify, homeowners must:

  • Have a state-approved insurance policy
  • Reside in a ZIP code within the California Department of Forestry and Fire Protection’s (CAL FIRE) “high” or “very high” fire risk zone
  • Meet local income eligibility requirements (in some counties, a family of four earning up to $159,550 may qualify)

Local governments can also apply for grants to fund broader fire mitigation programs, helping entire neighborhoods become more resilient and potentially more insurable. 

This initiative builds on Governor Newsom’s earlier executive order requiring the creation of a 5-foot “ember-resistant” zone around homes, known as “Zone Zero.” Together, these policies aim to reduce property loss and lower risk for insurers, part of stabilizing coverage availability across fire-prone regions.

Higher Minimum Payouts for Wildfire Claims

One of the most immediate changes for wildfire victims comes from Senate Bill 495, which increases the minimum advance payments insurers must provide after a home is destroyed.

Starting next year, insurers will be required to:

  • Pay at least 60% of a homeowner’s personal property coverage limit, up to $350,000, before receiving a detailed inventory of destroyed belongings.

Previously, the requirement was only 30% and capped at $250,000. This change is designed to help wildfire survivors recover faster, without the bureaucratic delays of itemizing every lost possession. The law also extends the deadline for submitting proof of loss to 100 days after a declared state emergency, giving families more time to focus on recovery rather than paperwork.

Although insurers initially opposed the measure, industry groups ultimately supported the compromise. The reform strikes a balance between providing immediate relief and maintaining financial safeguards for the insurance market.

Strengthening California’s FAIR Plan

The FAIR Plan, California’s public, last-resort insurance option for homeowners who can’t secure traditional coverage, will also receive critical financial reinforcement under Assembly Bill 226.

In recent years, FAIR Plan enrollment has surged to nearly 600,000 policies, as private insurers have retreated from high-risk areas. But the plan’s limited funding and rising claims, particularly after catastrophic wildfires, have raised fears of insolvency.

AB 226 gives the FAIR Plan new financial tools, including the ability to:

  • Access state-backed bonds
  • Open lines of credit to pay out claims after major disasters

This added flexibility is expected to reduce the need for emergency bailouts and limit rate spikes for policyholders. By stabilizing the FAIR Plan, California aims to ensure that every homeowner, even in the most fire-prone regions, has access to at least basic coverage.

Building Toward a More Resilient Future

While these reforms represent incremental progress, they mark an important shift in California’s approach: blending risk reduction, consumer protection, and financial sustainability. By investing in fireproofing grants, expediting recovery payments, and reinforcing the FAIR Plan, the state is working to restore confidence in the insurance market and make homeownership in wildfire zones more secure.

At the same time, many homeowners are still navigating a complex and evolving insurance landscape. That’s why working with Dayton, Ritz, and Osborne’s network of insurers can make all the difference. Whether you need help understanding how these new laws affect your current policy, finding coverage in a high-risk area, or exploring discounts for home hardening improvements, our insurance partners are here to help guide you through every step.

Call one of our network agents today.

Dayton Ritz + Osborne Insurance proudly serves the Hamptons area. Call today at 631-324-0420 or visit our website.