Two companion bills now sitting on the governor’s desk aim to answer a question that has plagued thousands of Southern California households since January 2025: When is it actually safe to move back home?

The Eaton and Palisades fires destroyed more than 16,000 structures and burned for nearly a month, sending up a toxic haze of burning trees, brush, plastics, metals and other manufactured materials. According to the state Insurance Department, more than 13,000 of the roughly 40,000 claims filed after the fires involved smoke damage rather than total loss.

Nearly two years later, many residents whose homes survived the flames still haven’t moved back in. They describe walking into houses that reek of smoke, coated in ash, soot and char, while they wait — often for months — on test results for lead, asbestos and other contaminants. Getting insurers to pay for cleanup and repairs has, for many, become its own ordeal. Survivors, remediation experts and even insurance representatives have all pointed to the same root problem: there simply are no statewide rules spelling out what constitutes safe, adequate smoke-damage remediation.

Assembly Bill 1642, authored by Assemblymember John Harabedian, a Pasadena Democrat, is designed to close that gap. Harabedian said the measure would establish “a first-in-the-nation standard for testing and remediation” — essentially, clear rules for identifying contamination and fixing it.

The bill works hand-in-hand with Assembly Bill 1795, written by Assemblymember Mike Gipson, a Gardena Democrat, which would require insurance companies to actually follow those new standards once they’re in place. Neither bill can become law without the other, and Gov. Gavin Newsom has until the end of the month to decide on both.

“We were hearing from survivors that they weren’t getting a fair shake from their insurance companies,” Harabedian said. “Kudos to survivor groups that worked with us on this. We hope others don’t have to go through what they went through.”

The two measures are part of a broader package of post-fire legislation aimed at insurance companies, whose handling of smoke-damage claims has drawn scrutiny from regulators and become the subject of lawsuits. State Farm, which covers roughly one-fifth of California’s property insurance market, and the state’s insurer-of-last-resort, the FAIR Plan, have both been accused by the Insurance Department of delaying and denying legitimate smoke-damage claims.

Last week, Los Angeles County sued State Farm, alleging unfair business practices in how it processed claims stemming from the 2025 fires. The lawsuit leaned heavily on findings from the Insurance Department’s own investigation, which found the company had denied or discouraged customers from seeking environmental testing and refused to reimburse policyholders who paid for testing themselves. The county also alleged that for homes still standing, State Farm often sent contractors who used cleaning methods that were inadequate — and in some cases unsafe.

State Farm spokesperson Sevag Sarkissian said the company “strongly disagrees” with the county’s characterization of its claims handling.

Kareem Ali’s home in Altadena is one of the few left standing on his cul-de-sac. But he and his wife still haven’t been able to live there. Since August, they’ve been staying in a donated RV parked on their property.

State Farm covered temporary housing for the couple from January 2025 through this past April, when the insurer stopped reimbursing them for an $8,000-a-month one-bedroom rental — one the company itself had recommended. Ali stopped paying rent after that, and three months’ worth is now overdue.

When it came to testing their smoke-damaged home, State Farm denied Ali’s request for environmental testing, so he and his wife paid $3,000 for it themselves. The insurer wouldn’t reimburse them and has since delayed or denied several cleanup claims — a process complicated, Ali said, by the fact that at least six or seven different adjusters have been assigned to their case over time.

“Every time we got some sort of momentum on our claim, they’d randomly switch,” he said.

Ali said the couple eventually spent through the money State Farm had provided for personal belongings, hiring contractors on their own to clean the home, remove insulation and replace carpeting. When they told the insurer more work was needed but they had run out of funds, the company denied the claim, he said. All the while, they’ve kept paying their monthly premiums. Ali said he’s asked their adjuster directly: “What are we paying for if we’re not going to get coverage?”

Elisa Jacobs Nixon and her family are in a similar bind. Months of disputes with State Farm over smoke-damage testing and cleanup have kept them out of their Altadena home as well.

Nixon paid $6,000 out of pocket for environmental testing in May 2025, results the insurer initially ignored. Her public adjuster — a private professional hired to advocate for policyholders during claims — suggested getting a contractor’s estimate based on those findings. That approach worked: within days, State Farm sent its own industrial hygienist to inspect the property, Nixon said.

Both her original report and the insurer’s follow-up testing turned up similar results, including elevated levels of several contaminants. The more recent test also detected asbestos.

Though her family remains displaced, Nixon said things finally appear to be moving in the right direction.

“This has completely hijacked my life, my kids’ lives, it’s just taken over everything,” she said. “That’s why these parameters (in the bills) are so important. My hope is this will spread across the U.S. and help disaster survivors everywhere.”

Under Harabedian’s bill, the state Department of Toxic Substances Control would be required to develop testing, repair and removal standards for lead and asbestos by the end of 2028, followed by standards for other contaminants — including heavy metals, cyanide and lithium — by the end of 2029.

Gipson’s bill would create a legal presumption that ash, soot, char or other combustion byproducts found in a standing home after a wildfire count as wildfire-related smoke damage for insurance purposes. It would also require insurers to inspect affected properties within 30 days of a claim, cover the cost of testing needed to restore homes to their pre-fire condition, and continue paying for temporary housing until repairs are complete.

Not everyone is on board. Karen Collins, a vice president at the American Property Casualty Insurance Association who also sits on the state’s smoke claims and remediation task force, said the industry remains “technically opposed to the bills.” While she acknowledged the legislation lays out a framework, she argued that any resulting regulations should “remain grounded in science.”

Public adjuster Brian Haden shares some of that skepticism, saying the bills are short on specifics and could end up being used as leverage by both survivors and insurers alike. He predicts litigation will remain the primary way disputes get resolved and questions whether the Insurance Department will have the teeth to enforce the new rules.

Jane Lawton Potelle, founder and executive director of Eaton Fire Residents United — whose data helped shape Harabedian’s bill — agrees the legislation won’t resolve every enforcement question. She also noted the new standards won’t take effect soon enough to help her or many current survivors directly. Still, she believes the mere fact that standards are coming could influence ongoing lawsuits and settlement negotiations.

“Insurers are relying on people not to know information,” she said. “I want people to know how to protect themselves and stop being afraid. Living in a contaminated home can make you sick. And it can devalue your property.”

Lawmakers also passed several other bills this session targeting insurer conduct more broadly, addressing complaints about payment delays and the practice of cycling multiple adjusters through a single claim.

Senate Bill 876 would require insurers to assign policyholders a single point of contact within 30 days of filing a claim, and to provide written notice any time a third adjuster is brought onto a case within a six-month span. It also mandates that insurers submit detailed disaster response plans to the Insurance Department by April 1, 2028, updated every two years or whenever the insurance commissioner requests it.

Senate Bill 877 would require insurers to include all preliminary and final calculations of loss amounts, covered damages and repair costs in claims documents provided to policyholders within 15 days of a request.

Senate Bill 878 would require insurers to pay out the cash value of a destroyed property within 30 days of it being declared a total loss, followed by the remaining replacement cost within 30 days of receiving the necessary documentation. Insurers that miss those deadlines would owe accrued interest on the amount owed.

Original source: CalMatters

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The admission came after attorneys representing former Carson homeowner Fa’alagilagi Meni-Siliga flagged the errors in motions submitted by State Farm’s legal team. In a court filing, attorney Eric Khodadian, who represents Meni-Siliga, said he uncovered numerous instances of what he called AI “hallucinations” — false legal references that appeared authoritative but had no basis in actual case law.

Meni-Siliga, a U.S. Postal Service letter carrier, sued State Farm along with a contractor, the contractor’s insurer and a public adjuster in July 2024 over the botched rebuilding of her home following a 2020 fire. According to the lawsuit, the blaze left her Carson house uninhabitable, and while repairs were underway, a subsequent storm caused additional water damage. She says delays in getting State Farm’s sign-off on repair work meant the job was never finished.

The fallout, according to court documents filed in January, was devastating. Meni-Siliga and her husband exhausted their savings and retirement funds, filed for bankruptcy, and ultimately lost the home to foreclosure.

“My family and I have lost forever our family home,” she wrote in the filing. “We do not come from money … It took many years and sacrifice for our family to purchase our home.”

State Farm had initially responded to the lawsuit by arguing that negligence on the part of Meni-Siliga, her contractor and the public adjuster was to blame for her losses, and separately contended she missed the legal deadline to file her claim. The case is scheduled for trial in October.

The dispute over AI-generated errors surfaced publicly during an Aug. 7 case management conference in Los Angeles Superior Court, where Khodadian presented his findings. In a subsequent filing, he described a tense scene afterward, saying a State Farm attorney appeared “visibly enraged” and followed him and his co-counsel down a courthouse hallway, repeatedly demanding to see the list of errors they had compiled.

That attorney, Kenneth Katel of the firm Musick, Peeler & Garrett, later filed a formal apology to the court and to Meni-Siliga. Katel said a colleague on the case had used AI tools to help prepare some of the filings without his knowledge. “I was not aware that AI had been used, but as lead trial counsel I accept full responsibility for our filings,” he wrote, adding that the firm has since revised its internal policy on AI use, though he did not detail the changes. Katel pushed back on Khodadian’s account of the hallway confrontation but acknowledged, “it is accurate to say I was upset given the seriousness of the allegations.”

Both Khodadian and Katel declined to comment further when contacted.

The attorney who relied on AI, Jacquelene Robinson, explained in her own filing that she discovered seven case citations across eight separate filings that were entirely fictitious, along with several mistaken case titles and quotations that didn’t actually appear in the cases she referenced. Robinson said she had used an AI research tool called Irys, mistakenly believing it was integrated with her firm’s subscription to Westlaw, a widely used legal research platform, and that it automatically verified citations. That assumption, she acknowledged, was wrong.

A State Farm spokesperson, Tom Hartmann, said the company is reviewing the matter. “State Farm expects its external counsel to conform to the highest level of ethical standards and professionalism, including confirming the accuracy of all legal filings,” he said. Hartmann did not respond to questions about how many outside law firms represent State Farm or whether the insurer vets firms’ AI policies before retaining them.

The episode reflects a growing problem across the legal profession as AI tools become more common in casework. Roughly 41% of law firms and 47% of corporate legal departments now report using generative AI in some capacity, according to a recent industry survey. Stanford law professor Daniel Ho, who studies the issue, said fabricated legal citations — often called hallucinations — have become increasingly common as AI adoption spreads. In research he co-authored last year, Ho found that some legal AI companies had overstated their tools’ ability to produce hallucination-free citations.

A global database tracking AI-related legal errors, maintained by a Paris-based researcher, has logged nearly 1,922 documented cases so far, the majority of them in the United States. Last year, a California attorney was fined a record $10,000 after submitting a legal brief in which 21 of 23 quotations turned out to be fabricated by ChatGPT.

The Meni-Siliga case now adds to a growing list of cautionary tales illustrating the risks of unchecked AI use in the courtroom — and the potential consequences for both attorneys and the clients they represent.

Original source: CalMatters

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The next insurance commissioner will oversee the largest insurance market in the country, with authority over property, auto, health, life, pet, ride-hailing and workers’ compensation insurance. But in recent years, the office has been defined largely by one urgent issue: the growing difficulty of securing affordable home and fire insurance as wildfire risk intensifies.

For many residents in fire-prone parts of Southern California and the Inland Empire, the question is not abstract. Homeowners have faced nonrenewals, limited options and steep premium increases, while others have been pushed toward the FAIR Plan, California’s insurer of last resort for fire coverage.

The next commissioner will inherit a difficult balancing act: keeping insurers in the California market while protecting consumers from unaffordable rates. Several insurance companies that previously stopped writing new policies or renewing existing ones have begun using new state regulations that allow different tools in setting rates. Those changes are expected to contribute to higher premiums as the Department of Insurance continues reviewing and approving rate increases.

The office also will have to address the fallout from last year’s Los Angeles County fires, where delays and denials in insurance claims have slowed recovery and rebuilding for many property owners. State Farm, California’s largest individual insurer, and the FAIR Plan are both facing lawsuits from homeowners and legal action by the Department of Insurance over their handling of claims connected to those fires.

The leading Democratic candidates include state Sen. Ben Allen, who is leaving the Legislature because of term limits; Jane Kim, chair of the California Working Families Party and a former member of the San Francisco Board of Supervisors; Patrick Wolff, a financial analyst who has not held public office; and Steven Bradford, a former state senator and assemblymember.

On the Republican side, the leading candidates are Stacy Korsgaden, a longtime insurance agent, and Merritt Farren, an attorney who lost his home in last year’s Palisades fire. Neither has held statewide public office.

The candidates have generally identified similar problems in California’s insurance system, but their proposed solutions differ. Kim has called for creating a state authority for wildfires and floods funded by a portion of policyholders’ premiums. Farren has proposed a state reinsurance authority funded through a fee charged by insurers to policyholders, an idea that both Kim and Allen have also shown interest in. Bradford has said he would examine a public-private partnership aimed at keeping insurance companies active in California.

Consumer advocates and former insurance commissioners have described the job as a demanding role that requires weighing the needs of homeowners, landlords, renters and businesses while also ensuring insurers believe they can charge rates that reflect the state’s wildfire risk.

U.S. Rep. John Garamendi, a Democrat whose district includes much of Contra Costa and Solano counties, served as California’s first insurance commissioner and later returned to the office for a second stint. He has described the position as complex and difficult work requiring close attention to detail.

Original source: CalMatters

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The “crisis” in California’s insurance market was caused by “a laser focus only on affordability,” said Nancy Watkins, a principal at Milliman, an actuarial firm, at a legislative hearing on Wednesday.  The companies are operating with “very crude tools” at the expense of availability and reliability, she said.

She said the current regulatory system is too rigid. “It’s like you’ve got your steering wheel locked straight ahead, you’ve got your speed set on cruise control, and now you find yourself on the Pacific Coast Highway,” she said. “What insurance company would agree to that?”

Home insurance premiums in California are a little cheaper than the national average — and much lower than premiums in other disaster-prone states like Florida and Louisiana. That’s without accounting for the fact that California has some of the most expensive housing in the country. 

California still has about 115 companies offering home insurance, said Michael Soller, a deputy commissioner for the state’s insurance department. As for whether more companies are likely to follow State Farm and Allstate, “we don’t think that will happen,” he said

Consumer and insurance industry groups and other experts have ideas for what they’d like to see California do in the wake of the news — few of which they agree upon. Here’s the debate over four of those ideas. 

Require State Farm to keep issuing new policies

There’s disagreement whether this idea, backed by the group Consumer Watchdog, is legal.

The idea hinges on how insurance prices are regulated in California. Under current laws, insurance companies can’t just charge whatever they want: They have to submit their proposed rates to the insurance department, which they back up by explaining their projected costs, losses, revenue and more. State regulators can approve a company’s proposed rates, or deny them, if they think, for example, the rates are unjustifiably high, or so low that they could put the company’s finances at risk.

Harvey Rosenfield, founder of Consumer Watchdog, said if a company suddenly says that it’s not going to take the same number of customers that it had projected when it got the department’s approval, then it has changed the assumptions on which the approval was based. 

“They granted themselves a de facto rate increase by reducing the risk” in a state where that’s illegal, said Rosenfield. The department could issue a notice to State Farm, he said, and tell the company it needs to keep selling new home insurance policies until it submits new rates and those rates are approved. 

The insurance department disputes that it has the power to do this. “Their claims are not supported by law,” said Soller, the deputy commissioner. “There’s a reason why it hasn’t been done by any insurance commissioner before.”

Let insurance companies use forward-looking catastrophe models

The kinds of data and statistical models insurance companies can use to set prices may sound like a nighttime sleep aid, but it’s a matter of lively discussion in insurance circles. 

When a company tries to justify rate changes, it is required to rely on past losses to project future losses. It can’t use factors like the locations of new homes it is covering — whether they’re in downtown San Francisco or rural wine country — or the increased risk of wildfires due to climate change.

“We do it in a very old-fashioned way, and it needs to be updated,” said Rex Frazier, president of the Personal Insurance Federation of California, an insurance industry group that counts State Farm as a member. He supports the use of forward-looking models, which are generally provided by other private companies. California already permits insurers to use models for earthquake insurance. 

If a company is trying to figure out how much it should charge for earthquake coverage, it would look at proximity to fault lines, Frazier said, but for wildfire insurance, California doesn’t do that. 

“For wildfire it just says ‘Well, looking backward, what have you paid over the last 20 years for wildfire clients?’” he said. 

Consumer groups generally oppose letting insurance companies use models, fearing that companies will use them to justify extreme price hikes, and that complex math will make scrutiny a challenge.

“They’re just very sophisticated crystal balls,” said Amy Bach, executive director for United Policyholders, a consumer group. Modeling companies generally see their models as intellectual property, which can pose a challenge for transparency. “Our fear is that they overstate risk,” said Bach. 

About a week and a half after State Farm’s announcement, the insurance department said it would host a public workshop on use of models in insurance pricing, ahead of considering regulations. The workshop will take place on July 13. 

On Wednesday, the Assembly’s insurance committee held a hearing on models. When asked by a legislator whether the department was moving toward incorporating catastrophe models, a department representative confirmed that it was. 

“Historic losses do not fully account for growing wildfire risks, or risk mitigation measures taken by communities,” said Michael Peterson, a deputy commissioner at the insurance department, during the hearing.

Address the increasing cost of insurance — for insurance companies

Insurance companies are just like us: They buy insurance! When insurance companies buy it, it’s called “reinsurance.” 

The cost of reinsurance has risen dramatically, and State Farm cited “a challenging reinsurance market” as one of the reasons it decided to stop selling new home insurance policies in California. 

When insurance companies explain their costs to the insurance department as part of the process for justifying their prices, they aren’t allowed to include the cost of reinsurance. The department hasn’t historically permitted it, Soller said, because it doesn’t regulate reinsurance. 

“What are insurers supposed to do when, on the one hand, the Department of Insurance is telling them ‘maintain your solvency’ and then, on the other hand, when their costs go up, you can’t charge for it,” said Frazier.

Insurance industry groups say it would help if they could incorporate the cost of reinsurance into their prices. But consumer groups say that the move would cause premiums to spike. 

“Californians would see immediate massive rate hikes — both as soon as that went into effect and ongoing,” said Carmen Balber executive director of Consumer Watchdog. A reinsurance provider regulated by California would address problems she sees with the reinsurance market, Balber said, but that doesn’t exist currently.

Reduce the risk of disasters

The underlying problem is that disasters happen in California — at an increasing rate thanks to climate change — and that homes are at risk. They’re in the middle of the woods, or surrounded by flammable grasslands, or on the edge of bluffs that are expected to erode. Making homes less likely to burn, flood or collapse would be good for homeowners and would also make California feel less risky to insurers.

There’s no shortage of ideas for how to reduce risk, and there’s been action on this front in recent years. The insurance department, for example, has required insurance companies to consider whether homeowners take certain steps to protect their homes — like installing fire-resistant vents and clearing out vegetation under decks — in their prices.

California has set aside $2.7 billion for wildfire resilience over the past three years, according to the insurance department. When the department convened a group of environmental advocates, researchers, and public policy and insurance experts to make recommendations on how to reduce the risks of climate change, they came up with a long list. Among the recommendations: 

• Create statewide hazard maps so that future risks are more clear to the public 
• Increase funding to retrofit homes 
• And apply fire-resistant building codes in areas with moderate to higher fire risk.

Cutting greenhouse gas emissions would ultimately be the best way to reduce the risk, said Alice Hill, chair of the group convened by the department and a senior fellow for energy and the environment at the Council on Foreign Relations. But the world will get warmer even if we reduce emissions, she said, so focusing on where and how homes are built remains important.

“That could mean not building in areas that are just becoming too risky,” Hill said.

The post Four things California can do as home insurers retreat appeared first on The Hemet & San Jacinto Chronicle.

Insurance giant State Farm is no longer accepting new applications for business or personal property coverage in California. “We take seriously our responsibility to manage risk,” the company said in a statement posted to its website Friday. “State Farm General Insurance Company made this decision due to historic increases in construction costs outpacing inflation, rapidly growing catastrophe exposure and a challenging reinsurance market.”

Automobile insurance is not affected by the change, which took effect Saturday. The company was the state’s largest provider of property and casualty insurance as of 2021, the most recent year for which data are available from the California Department of Insurance. “While insurance companies prioritize their short-term financial goals, the long-term goal of the Department of Insurance is protecting consumers,” said Michael Soller, deputy insurance commissioner and spokesman. “The factors driving State Farm’s decision are beyond our control, including climate change, reinsurance costs affecting the entire insurance industry and global inflation.”

Last year, California became the first state to require insurance premium discounts for owners who implement wildfire protection safeguards at homes or businesses. The change was a response to soaring insurance costs for people in areas prone to wildfire. “Protecting Californians from deadly wildfires means everyone doing their part, including insurance companies, by rewarding consumers for being safer,” Insurance Commissioner Ricardo Lara said at the time.

While State Farm pledged to “work constructively” with California policymakers and regulators, the change is necessary to “improve the company’s financial strength,” the statement said. State Farm last year posted a net loss of $6.7 billion, driven largely by losses in the auto division. The company’s homeowner division recorded $849 million in underwriting gains.

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