California homeowners could face property insurance premium increases of up to 50 percent under Gov. Gavin Newsom's proposal to shift utility wildfire liability to insurers. The plan, not yet filed as legislation, would end insurers' subrogation claims against utilities and faces a Monday legislative deadline.
Property insurance premiums could rise as much as 50 percent in California under Gov. Gavin Newsom's plan to shift utility wildfire liability to insurers, industry executives warned.
"The party whose equipment ignites a catastrophic fire should bear the economic consequence of that fire," 15 insurance executives wrote in a letter to Newsom. "Shifting those costs to policyholders does not reduce the cost of electricity but does make homeownership more expensive and insurance coverage harder to find."
The proposal, detailed in a confidential document obtained by Politico, would stop property insurers from recouping losses from homes destroyed in utility-caused wildfires through subrogation claims. The Personal Insurance Federation of California estimates the highest rate increases would hit families in severe fire-risk areas. Southern California Edison and the state's two other large for-profit utilities have lobbied for further liability protection since last year's Eaton fire, which killed 19 people and destroyed thousands of homes.
No legislation has been filed yet, and the legislative session ends Monday at midnight, leaving little room for public debate. The proposal also includes limiting attorney fees in wildfire litigation and reducing payments for non-economic damages, drawing protests from more than 50 Eaton fire victims outside the governor's mansion in Sacramento.
Government fire investigators determined the Eaton fire was caused by electrical arcing on Edison's out-of-service transmission line in Eaton Canyon, a line the utility had kept in place since 1971. More than 11,000 households have filed suit against Edison, which denies negligence claims. A $21 billion state wildfire fund created in 2019 is reimbursing Edison for settlement payments to victims.
"The proposal would shift billions of dollars in wildfire costs away from utilities and onto insurance consumers across the state, making coverage more expensive and harder to find," said Denni Ritter at the American Property Casualty Insurance Assn.
Newsom defended the plan at a news conference Wednesday, saying current law allows insurers to be paid before victims after a fire. "The insurance industry is going to do everything to make sure they get paid first," he said.
The proposal also would reduce amounts local governments receive from utility-caused fires. The California State Assn. of Counties said that would shift costs to local taxpayers. "Shifting wildfire costs to local governments is unjustified when utilities continue to generate significant profits and return billions to shareholders," the association said in a brief to lawmakers.
For California homeowners, the stakes are immediate: higher premiums and reduced coverage availability in a state already facing an insurance availability crisis. The legislative session's Monday deadline means a bill could move with minimal public scrutiny, and the outcome will determine who bears the cost of the state's escalating wildfire risk.
This article is for informational reference only and does not constitute professional advice; figures and policy details reflect information available at the time of writing and should be verified against the latest official announcements.
