January 21, 2021

Volume XI, Number 21

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California Moratorium on Cancellation and Nonrenewal Due to Wildfire

On Thursday, November 5, the California Department of Insurance (CDI) issued the long-awaited Bulletin 2020-11, implementing the 2020 wildfire season’s targeted moratorium on cancellations and nonrenewals based on wildfire exposure for admitted and nonadmitted residential property insurance policies located in certain ZIP codes affected by wildfire. The Bulletin was amended on November 6 to update the list of affected ZIP Codes.

IN DEPTH


In August, the CDI warned insurers not to nonrenew or cancel any residential property insurance policies in effect as of August 18 in “any known fire areas in the State” in anticipation of the publication of the ZIP Codes to which the moratorium on cancellation and nonrenewal would apply. California Insurance Code section 675.1, enacted in 2019, provides that when a state of emergency has been declared, insurers may not cancel or nonrenew residential property insurance policies for one year from the declaration of a state of emergency “based solely on the fact that the insured structure is located in an area in which a wildfire has occurred.”

California Governor Gavin Newsom declared a state of emergency on August 18, 2020, and declared three more states of emergency on September 6, 10 and 28. For each state of emergency, the fire perimeter is determined by the California Department of Forestry and Fire Protection in consultation with the California Office of Emergency Services, and the data is provided to the CDI. The CDI then publishes a bulletin (such as Bulletin 2020-11) listing the ZIP Codes to which the moratorium on cancellation and nonrenewal applies, which includes both those ZIP Codes that have suffered wildfire as well as any ZIP Codes adjacent to the fire perimeter. This year’s moratorium covers 477 separate ZIP Codes, some of which fall under multiple states of emergency. The CDI noted that it may issue a supplemental bulletin if additional ZIP Codes are determined to be affected.

The Bulletin orders insurers to rescind any notices of cancellation or nonrenewal that they may have issued covering properties in the affected ZIP Codes during the states of emergency, and to reinstate such policies. We note, however, that this applies only to policies canceled or nonrenewed “based solely on the fact that the insured structure is located in an area in which a wildfire has occurred.”

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© 2020 McDermott Will & EmeryNational Law Review, Volume X, Number 321
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Andrea Best Insurance Regulatory Compliance Attorney McDermott Will Emery Law Firm UK
Partner

Andrea T. Best* advises clients on insurance regulatory compliance throughout the United States. She works with insurers, reinsurers, intermediaries, brokers, trade associations and others in the insurance market.

Andrea actively monitors state insurance-related legislative and regulatory developments and works extensively with London, Bermuda and European insurance market participants regarding non-admitted insurance and reinsurance transactions in the United States, including regulatory advice on structuring insurtech, and on sharing economy and gig economy insurance programs in...

+44 20 7577 6950
Dan Brown Insurance Attorney McDermott Will & Emery San Francisco, CA
Partner

Dan Brown represents insurance companies, start-ups, agents, brokers and other stakeholders in all aspects of the admitted, exempt and surplus lines insurance markets in the United States.

Dan advises alien or foreign insurers on how to comply with various state laws in placing business; early-stage and developed insurtech entities on regulatory and corporate issues; insureds on exempt and specialty lines; producers on licensing, placement and premium tax issues, including digitization of the process; and insureds on coverage and placement issues. He advises London market...

628-218-3820
Thomas M. Dawson Corporate & Insurance Attorney McDermott Will & Emery New York, NY
Partner

Thomas M. Dawson represents US and non-US insurers on regulatory, licensing and corporate matters.

Tom advises industry participants on a wide variety of regulatory and transactional matters, including cybersecurity compliance, insurtech ventures and Holding Company Act filings. He has helped clients form, acquire and invest in US insurers, reinsurers and intermediaries. He counsels non-insurers on advertising, licensing and marketing generally, and provides regulatory compliance advice to service contract issuers and other specialty product providers.

Tom has guided non-US...

212-547-5419
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