California Mandates Insurers Expand Coverage in Fire-Prone Areas

New regulations require insurers to cover wildfire-risk regions, with provisions allowing higher rates to offset costs.

California insurers must increase coverage in high-risk wildfire areas by 5% every two years until reaching 85% of their market share in those regions.
The regulation aims to stabilize the insurance market and ensure access to coverage for homeowners in vulnerable areas impacted by climate change and intensifying wildfires.
Insurers will be allowed to include reinsurance costs in premiums and use catastrophe modeling to set rates, marking a shift in California's pricing rules.
Consumer advocacy groups warn the changes could lead to significant premium hikes, with some estimates predicting increases of 40% or more.
The regulation, part of a broader insurance reform package, is pending administrative review and is expected to take effect within 30 days.