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California Department of Insurance outlines bills to reform fair plan, disaster claims and smoke-damage rules
Summary
At a Piedmont City Council meeting, a Department of Insurance outreach analyst summarized rising fair-plan use in ZIP 94611, drivers of the insurance crisis, and several bills (AB 1680, SB 876, SB 1795) intended to improve claims handling, penalties and smoke-damage standards, and urged cities to submit letters of support.
Sharon Smith, an outreach analyst with the California Department of Insurance, told the Piedmont City Council that residential use of the state's insurer-of-last-resort — the fair plan — has surged in some neighborhoods and that the department is sponsoring a suite of bills to improve consumer protections and claims handling.
"From 2024 to 2025, there's an increase of 53% in the 94611 area. That's 2,554 policies in just this ZIP code," Smith said, citing fair-plan data and linking the trend to more intense climate-driven disasters, higher rebuild costs and rising reinsurance prices.
Smith described the sustainable insurance strategy that allows insurers to use forward-looking catastrophe models and said insurers will be able to account for parcel-level mitigation when pricing risk. She also outlined several pieces of pending legislation the department is backing: AB 1680 (the Make It Fair Act) to strengthen operations and accountability at the fair plan; SB 876, a disaster-recovery bill to require insurers to have claims-handling disaster plans and to double penalties for unfair claims practices; and SB 1795, the Smoke Damage Recovery Act, to establish science-based inspection and remediation standards for smoke-impacted homes.
"This would require insurers to have a disaster recovery plan for claims handling and processing," Smith said of SB 876, and added that the bill would "double penalties on unfair claims practices" and expand policyholder restitution.
She said other reforms would require annual replacement-cost reviews so homeowners are not underinsured, mandate premium discounts tied to home-hardening and community mitigation under the Safer from Wildfires framework, and expand living-expense coverage to 100% of policy limits after a declared disaster.
Council members asked about enforcement and whether the bills will make insurance more available. Smith said the department is a consumer-protection agency that relies on consumer complaints and market-conduct exams to detect systemic problems and that some measures could increase availability by modernizing regulatory tools and encouraging insurers to write in high-risk areas under new modeling rules.
Piedmont Police Chief Branigan, who attended the presentation, noted local steps the city has taken: "We self-designated the wildland-urban interface and adopted the wildland urban interface fire code," he said, and added that community-level vegetation management and home hardening can improve insurability when insurers evaluate catastrophe models and neighborhood mitigation.
Smith closed by urging local governments with high concentrations of fair-plan policies to consider sending letters of support; she shared a QR code with draft letters and said she would distribute PDFs and flyers for local outreach. The council did not take action on the bills during the meeting and there was no public comment on the presentation.
Next steps: Smith said the bills had been introduced and assigned to committees with hearings scheduled; she provided resources and offered to follow up with materials for the city to share with residents.
