The California Insurance Commissioner and newly-appointed Senate Insurance Committee Chair Steve Padilla announced Senate Bill 876, a comprehensive legislative reform to speed up disaster recovery for homeowners and renters through improved insurance coverage and expanded consumer protections. They are proposing legislation directly responding to wildfire disaster survivors’ call for swifter claims payments and an end to delays and runarounds by insurance companies.

The Department of Insurance said that “The payment of insurance claims from insurance companies for the Los Angeles wildfires is already the fastest on record, with $22.4 billion distributed since January 2025, along with $6 billion in federal, state, local, and private donations committed.

According to the DOI press release the “Disaster Recovery Reform Act, authored by Senator Padilla, aims to cut red tape, improve payouts, and end delays and runarounds by insurance companies.”

– – Requiring a “disaster recovery plan” from insurers for handling claims and meeting timelines – reviewed by the Department in advance and put into effect in an emergency situation.
– – Doubling penalties during a declared emergency for violations of insurance fair claims practices and settlement law.
– – Requiring insurance companies pay restitution directly to policyholders when they violate the law.
– – Addressing delays resulting from the assigning of multiple adjusters by requiring insurance company status reports to policyholders within 5 days anytime a new adjuster is assigned.
– – Improving recovery by expanding policy limits for Additional Living Expenses by 100% in a declared disaster.
– – Expanding up-front payments by requiring Actual Cash Value and structure replacement cost be paid quickly following a total loss, with interest payable if late.
– – Providing adequate recovery funds by requiring a mandatory offer of extended and guaranteed replacement cost coverage when writing a policy, and regular updated replacement cost estimates for new business and renewals.
– – Safer rebuilding by applying mandatory building code upgrade coverage at the time of rebuild – not at the time of loss – to account for updated rules.

The DOI said that this “legislation builds on major legislative reforms that Commissioner Lara sponsored last year after the Los Angeles wildfires. These newly enacted laws establish a wildfire safety grant mitigation program, expand insurance discounts, speed up claim payouts for wildfire survivors, extend non-renewal moratorium protections to businesses, strengthen the financial stability of the FAIR Plan, and modernize outdated insurance laws to improve transparency and accountability.”