SB 1301 and SB 1209 Sent to Governor to Improve Ratepayer Protections

SACRAMENTO – Senator Ben Allen (D-Pacific Palisades) advanced a pair of policies out of the Legislature to protect ratepayers from unnecessarily losing their insurance coverage or falling victim to bad business practices.

“California ratepayers have faced an increasingly difficult insurance market, with rising premiums and fewer options available to them in the face of increasing disaster risk,” said Allen. “Working families need better protections to maintain their existing policies and ensure businesses are operating in a manner that best serves them. Otherwise, we risk further burdening the FAIR Plan, pricing more Californians out of homeownership, and inadequate coverage for when disaster strikes.”

Californians have faced the fourth highest rate of insurance nonrenewals in the nation, leading to a 250% increase to the FAIR Plan’s total exposure since 2022. The notices often do not provide sufficient information detailing the reasons why a policyholder is being dropped, leaving them without guidance as to how they may reduce risk or improve insurability. Policyholders have also been dropped by insurers for faulty reasoning, such as claims of mold or algae on a roof that never actually existed.

SB 1301 requires nonrenewal notices to include the reasoning that led to a nonrenewal decision, and to provide policyholders with a path to remediate the identified risk in order to maintain their existing policy. It also requires insurers provide the notice 90 days prior to the policy’s expiration, providing sufficient time for remediation or for the individual to shop for a new policy in the private market before getting stuck on the FAIR Plan.

In addition to providing guidance so policyholders can address the risk of loss, sufficient detailing requirements give the opportunity to contest the reasons identified for a nonrenewal to protect Californians from being wrongfully dropped from coverage.

To protect policyholders from harmful business practices, the Department of Insurance conducts routine market examinations on individual insurers to verify businesses are operating fairly, safely, and in compliance with the law. Reports are issued after the exam to identify corrective actions for the insurer to take.

While most insurers voluntarily comply with these recommended actions, there is no clear tool to require insurers adopt the corrective actions. A 2025 examination of the FAIR Plan found that it had implemented less than half the recommendations provided in a 2022 report, leading to a failure of sufficiently serving policyholders in the aftermath of the 2025 LA Fires.

“Our laws are only as strong as they are enforced,” added Allen. “When we identify operational deficiencies or noncompliance within business practices, corrective action should follow immediately to protect policyholders and the health of the broader industry.”

SB 1209 expands the Department’s authority to enforce corrective action by authorizing penalties of up to $20,000 per violation. The penalties would be decided through a formal hearing process to determine whether a penalty should be levied.

“When insurance companies break the rules, policyholders pay the price. SB 1209 closes the enforcement loop by holding insurers to strict, non-negotiable timelines to fix systemic violations,” said Commissioner Lara. “Partnering with Senator Ben Allen on this bill ensures the Department isn't just identifying bad practices, we're stopping them before consumers suffer."

Governor Newsom now has until September 30 to make a decision on the two proposals.