California wildfire liability deal could shift costs to homeowners as lawmakers face Aug. 31 deadline
California lawmakers are negotiating a late-session wildfire liability package that could speed payments to fire survivors and reduce the financial exposure of electric utilities, while insurers warn that shifting more losses to policyholders could raise premiums and make coverage harder to find.
Gov. Gavin Newsom and legislative leaders had not released final public bill text as of Friday, Aug. 28, 2026. Lawmakers faced a Friday deadline to publish bills before voting, and the regular legislative session ends at midnight Monday, Aug. 31. Until a bill is published, passed by both chambers and signed or otherwise enacted, the proposals do not change California insurance, utility or wildfire-liability law.
What Newsom is proposing
A central proposal would eliminate or restrict insurance subrogation after a utility-caused wildfire. Subrogation allows an insurer that has paid a homeowner’s claim to seek reimbursement from the company responsible for the damage.
Newsom’s stated goals are to prioritize and accelerate payments to survivors, reduce litigation, protect utility financial stability and limit pressure on electricity rates. His broader package has included limits on attorney fees, restrictions on hedge-fund purchases of wildfire claims and changes to how claims are prioritized.
Negotiating documents and reports have described possible limits on pain-and-suffering and other non-economic damages. They also have raised restrictions on how much local governments could recover for destroyed roads, public buildings and other infrastructure. Those provisions remain disputed and could change or disappear before any bill is introduced.
Why insurers object
Insurance executives say eliminating or limiting subrogation would transfer billions of dollars in wildfire costs from utilities to insurers and, ultimately, their customers. The Personal Insurance Federation of California has warned that premiums could rise by as much as 50% in areas facing severe wildfire risk.
That figure is an industry estimate, not a statewide forecast or an approved rate change. Any effect on premiums or coverage availability would depend on the final law, insurers’ costs, regulatory approvals and the location and risk of a property.
California homeowners would not automatically see an immediate increase. The practical question is whether insurers would be left with more losses they cannot recover from utilities and respond by seeking higher rates, reducing exposure or declining to write some policies.
How the Wildfire Fund fits in
California’s existing Wildfire Fund was created in 2019 to help protect participating utilities from financial instability after eligible wildfires caused by their equipment. The participating utilities are Pacific Gas & Electric, Southern California Edison and San Diego Gas & Electric.
The fund has approximately $21 billion in claim-paying capitalization, divided roughly equally between utility shareholders and ratepayers. Shareholders supplied about $10.5 billion, while ratepayer contributions are collected through monthly non-bypassable charges on eligible utility bills. The fund explainer reported more than $12 billion in liquid assets under management as of January 2025.
The fund does not pay private residents directly. It reimburses eligible participating utilities for covered claims under statutory conditions. Participation also requires utilities to meet safety and wildfire-mitigation requirements, including approved wildfire mitigation plans and safety certifications.
The California Senate’s background paper identifies the fund, subrogation claims and the distribution of wildfire liability as policy questions that lawmakers have continued to examine rather than settled answers.
Why survivors and lawmakers are pushing back
Wildfire survivors, local governments, consumer advocates and some lawmakers argue that the proposed limits could reduce accountability or leave communities with more uncompensated damage. Assembly and Senate negotiators have opposed or questioned provisions involving non-economic damages, insurance reimbursement and local-government recovery.
The Eaton Fire is the immediate backdrop. Earlier this month, state and Los Angeles fire officials found Southern California Edison responsible for the January 2025 fire’s ignition. The blaze killed 19 people and destroyed about 9,400 structures. That investigative finding is distinct from final court judgments, settlements and other legal resolutions involving individual claims.
Reports on the negotiations say any new rules would apply only to future wildfires, not automatically rewrite existing Eaton Fire claims. Survivors and local governments could face different consequences depending on final rules governing damages, claims priority and reimbursement.
What happens next
Lawmakers must publish a bill before they can vote on it. Any measure would then need to pass both legislative chambers before the Aug. 31 session deadline and take effect under California’s enactment rules. No new statewide insurance or wildfire-liability law was confirmed in force as of Aug. 28.
Residents should watch for a published bill, committee action and final votes before assuming their insurance, utility bills or legal rights will change. The main policy question remains who will absorb future utility-caused wildfire losses: utilities and shareholders, insurers and policyholders, ratepayers through utility bills, taxpayers or some combination.
Current insurance protection for some wildfire survivors
Separately, California law provides a mandatory one-year moratorium on wildfire-related cancellations and non-renewals for qualifying residential policyholders in ZIP codes within or adjacent to certain declared fire perimeters. The protection lasts one year from the date of the governor’s emergency declaration and applies to covered policyholders who suffer less than a total loss, while people with a total loss receive additional protections.
The Department of Insurance works with Cal Fire and the Governor’s Office of Emergency Services to identify affected ZIP codes. The department’s current list includes an Aug. 6, 2026 declaration for the Gann Fire in Calaveras County, along with declarations for earlier fires including the 2025 Eaton Fire.
Homeowners who receive a wildfire-related cancellation or non-renewal notice should check whether their ZIP code is covered and contact the California Department of Insurance if an insurer refuses to reinstate a policy protected by the moratorium.
Sources
- Los Angeles Times: Insurance executives warn Newsom plan would raise premiums
- KPBS/CalMatters: Lawmakers reject key parts of Newsom’s wildfire plan
- California Senate background paper on utility wildfire liability
- California Wildfire Fund media explainer
- California Department of Insurance: Mandatory one-year moratorium on non-renewals
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