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Assemblymember Harbidi’s bill to extend post‑disaster nonrenewal moratoriums advances amid debate over ZIP‑code scope
Summary
AB 2038 would extend moratorium timelines protecting homeowners after disasters; industry witnesses warned the ZIP‑code perimeter and longer moratoriums risk reducing insurer capacity, while proponents said more time is needed for rebuilding and sustainable‑insurance reforms. The committee advanced the bill to Appropriations.
Assemblymember Harbidi introduced AB 2038 to extend moratorium protections for homeowners affected by declared disasters, telling the Senate Committee on Insurance the bill would lengthen time windows used to prevent cancellations and nonrenewals for total losses and properties within fire perimeters.
Harbidi said the measure extends the protections established under SB 824 and is intended to give survivors more time to rebuild while the state’s broader sustainable insurance strategy takes effect. Robert Harel, executive director of the Consumer Federation of California, testified in support and urged passage, describing lengthy rebuild timelines and undersettlement issues that leave homeowners vulnerable.
Industry witnesses opposed the expansion of moratoriums to nearby but untouched ZIP codes and warned of systemic capacity effects. Mark Seggin of the American Property Casualty Insurance Association told the committee that mandating broader or longer moratoriums can constrain insurers’ ability to rebalance exposure and cited state figures indicating roughly 1,000,000 homes were under nonrenewal moratorium in February 2024. "When insurers cannot actively manage exposure... that company may be compelled to reduce exposure even in lower risk areas to remain solvent," Seggin said. Paul Ramey of the Personal Insurance Federation of California echoed concerns that locking large swaths of exposure without a solvency exception could worsen availability and affordability elsewhere.
Senators probed tradeoffs including whether a second year of protection for homes outside the fire perimeter could be conditioned on mitigation or home‑hardening measures. Senator Jones and Senator Richardson pressed the industry and author for alternatives to the ZIP‑code perimeter; Richardson said she would support the bill in committee but might oppose it on the floor if the ZIP‑code definition is not revisited. Harbidi responded that AB 2038 does not change the existing ZIP‑code perimeter from SB 824 and that his bill merely extends timelines; he said he remains open to evidence‑based alternatives and further amendments.
Senator Richardson moved the bill; the committee voted to pass AB 2038 to the Appropriations Committee (chair announced "Ayes are 4; Noes are 0"). The committee also moved consent items and another bill to the Privacy Committee later in the hearing. AB 2038 will next be considered by Appropriations, where fiscal impacts and market analysis may be examined.
