The Palisades (Hudson River)

California regulators are ordering banks and credit unions to report on how they have managed insurance payouts owed to survivors of the January 2025 Palisades and Eaton fires, which destroyed more than 16,000 homes and structures in the Los Angeles area. The California Business and Consumer Services Agency and the Department of Financial Protection and Innovation gave lenders two weeks to submit data, after DFPI received more than 160 complaints about payment delays since January 2025.

The move follows a July letter from Gov. Gavin Newsom to banking and credit union associations, ordering the state to track lenders that take longer than 10 days to release insurance proceeds without a plan to speed things up. Newsom previously signed a law requiring lenders to pay interest on insurance funds they hold. DFPI Commissioner KC Mohseni said the agency could pursue fines against lenders that unnecessarily delay payouts. Very few destroyed homes have been rebuilt so far, and the dispute adds to ongoing debate over who bears the financial burden of California's wildfires.

California regulators will order mortgage lenders, including banks and credit unions, to report within two weeks on how they have handled insurance payouts owed to survivors of the January 2025 Palisades and Eaton fires, which destroyed more than 16,000 homes and structures in the Los Angeles area. The requirement comes from the California Business and Consumer Services Agency and the Department of Financial Protection and Innovation (DFPI), which has logged more than 160 complaints since January 2025 about lenders delaying or mishandling insurance proceeds meant for rebuilding.

The move follows a July letter from Gov. Gavin Newsom to banking and credit union associations warning that some lenders were holding payouts for weeks before releasing them, and directing the state to track lenders exceeding a 10-day distribution window without improvement plans. Newsom previously signed a law requiring interest payments on held insurance funds. DFPI Commissioner KC Mohseni said the agency may pursue fines against lenders that unnecessarily delay payouts as rebuilding efforts continue amid broader, long-running disputes over who bears the financial cost of California's wildfires.

Gov. Gavin Newsom has signed a package of bills establishing California's first statewide standards for testing and remediating smoke damage from wildfires, aimed at speeding recovery for survivors of the January 2025 Los Angeles County fires. Nearly two years later, many homeowners whose houses did not burn remain displaced amid disputes with insurers over who pays for smoke-damage testing and cleanup; the state Insurance Department estimates more than 13,000 such claims stemmed from the fires.

Assembly Bill 1642 directs the Department of Toxic Substances Control to set lead and asbestos testing standards by 2028 and broader contaminant standards by 2029, with existing federal and state rules applying in the interim. AB 1795 creates a legal presumption that smoke damage in a fire zone originated from the fire, requiring insurers to cover testing, remediation and alternative living expenses until a home is confirmed safe to reoccupy. Additional bills establish a statewide mortgage forbearance program for homes deemed uninhabitable after disasters and extend forbearance to 24 months for fire survivors. Advocacy group Eaton Fire Residents United, whose testing found lingering contaminants even after professional cleanup, backed the changes. Insurers and local governments remain in separate disputes over smoke-damage claim handling.

California lawmakers have passed Senate Bill 1153, which would give water agencies a legal defense against lawsuits blaming them for hydrants running dry during wildfires. The bill clarifies that public water agencies have no duty to design or maintain systems for wildfire suppression, and that loss of water pressure during a wildfire is not a "substantial cause" of fire damages. It also requires water suppliers in high fire-risk zones to include wildfire-specific response procedures in disaster plans. The measure, sponsored by the Assn. of California Water Agencies, awaits Gov. Gavin Newsom's signature.

The bill follows lawsuits against Los Angeles and the LADWP over hydrant failures and an empty Santa Ynez Reservoir during January 2025's Palisades fire, which killed 12 people. Similar hydrant failures occurred in the Eaton fire and past blazes including the Tubbs, Thomas, and Woolsey fires. A separate bill requiring water agencies to disclose backup pump power failed, though a narrower Ventura County law mandating backup power was enacted last year. Supporters say SB 1153 protects ratepayers from costly litigation; critics argue it lets agencies avoid accountability for preparedness gaps.