Newsom Vetoes SB 877 and SB 878, Leaving Gaps in Insurance Protections for California Wildfire Survivors

On September 27, Governor Gavin Newsom signed two wildfire insurance reforms into law and vetoed two others. The vetoed bills, SB 877 and SB 878, would have given wildfire survivors clearer insight into how insurers value their losses and firm deadlines for insurers to respond to and pay claims.

Both bills were authored by Sen. Sasha Renée Pérez, whose district includes the Eaton Fire burn area. They were written to address problems survivors reported while trying to collect the insurance benefits they had paid for after the 2025 fires. For families still working to rebuild, the vetoes raise a question that has defined California’s wildfire policy debate all year: who covers the cost?

The Fight Over Who Pays When Utilities Cause Wildfires

The vetoes came weeks after a separate fight over utility liability. In August, the California Legislature rejected key elements of Governor Newsom’s proposed utility liability plan. The proposal would have limited insurers’ ability to recover losses from utilities and capped some damages available to wildfire survivors.

Consumer Watchdog and wildfire survivor advocates opposed the plan, arguing that shifting costs away from utilities would ultimately leave policyholders paying more through higher premiums. Consumer Watchdog estimated the proposal could have raised insurance costs by hundreds of dollars a year for many policyholders and by thousands for homeowners in high-risk areas.

The Legislature’s decision preserved survivors’ ability to seek damages from utilities that cause wildfires, and it protected insurers’ ability to pursue those utilities for the losses they caused. The next battle centered on what happens after a survivor turns to an insurance company for help rebuilding.

What the Governor Signed

Governor Newsom signed two bills that strengthen protections for policyholders:

• SB 876, the Disaster Recovery Reform Act, increases penalties for insurers that violate fair claims practices during declared emergencies, requires restitution to policyholders when insurers engage in unfair settlement practices, requires insurers to maintain disaster recovery plans, and requires timely notice when an insurer changes the adjuster handling a claim.
• SB 1301 gives homeowners more protection against insurance nonrenewal. It generally requires insurers to provide 90 days’ notice of nonrenewal, explain the reason for the decision, and give homeowners an opportunity to address certain problems before they lose coverage.

These reforms offer meaningful protection, but the two vetoed bills targeted different problems that remain unresolved.

What SB 877 Would Have Done

SB 877 addressed a basic transparency problem: what happens when an insurance company changes its assessment of how much a homeowner’s loss is worth?

Under existing law, California’s standard fire insurance policy allows policyholders to request claim-related documents, including valuation and loss-adjustment calculations. SB 877 would have clarified that those documents include both preliminary and final calculations of the amount of the loss, the covered damage, and the cost of repairs.

A wildfire survivor might receive an initial estimate of the cost to rebuild, only to see that figure reduced later. Without clear access to the underlying calculations, it can be difficult for a homeowner to understand how or why the insurer arrived at a different number, and harder still to challenge it.

What SB 878 Would Have Done

SB 878 addressed delays in processing and paying claims. It would have required insurers to respond to claims in writing and to make certain payments within 30 days, with interest accruing when applicable deadlines were missed.

California regulations already set requirements for insurer responses and certain payment deadlines. Senator Pérez and wildfire survivors argued that those rules did not prevent the delays they experienced after the 2025 fires, and that putting firm deadlines into statute would give policyholders stronger footing.

Why the Governor Vetoed the Bills

In his veto messages, Governor Newsom said SB 877 and SB 878 would codify portions of existing regulations and were “unnecessary at this time.”

That reasoning is difficult to square with the broad support both bills received in the Legislature. SB 877 passed the Senate 35–0 and the Assembly 78–0, without a single vote against it in either house. SB 878 passed the Senate 29–6.

SB 877 would have required carriers to show policyholders the calculations behind their own claim decisions. That transparency costs an insurer nothing, and it gives a homeowner the information needed to understand, and if necessary dispute, a reduced payment. SB 878 would have cost a carrier only interest, and only if it failed to pay a claim on time. An insurer that pays promptly, as the law already requires, would owe nothing extra. The bill simply gave carriers a financial reason to act ethically and comply with the law.

The timing has drawn criticism from Consumer Watchdog and wildfire survivors, particularly because Senator Pérez and survivor advocates had recently opposed the Governor’s effort to limit utility liability. Consumer Watchdog has characterized the vetoes as retaliation. The Governor’s stated position is that existing regulations already address these issues, and there is currently no public evidence establishing that the vetoes were motivated by retaliation.

What the Vetoes Mean for Eaton Fire Survivors

The Eaton Fire ignited on January 7, 2025, killing 19 people and destroying nearly 9,500 structures in Altadena and Pasadena. In August, the Los Angeles County Fire Department reported that the fire was caused by electrical arcing on an out-of-service Southern California Edison tower. Nearly two years later, many of the families who lost homes are still not back in them.

A survey of 2,443 Los Angeles fire survivors conducted by the nonprofit Department of Angels in late 2025 found that 70% had not yet returned home and 79% were facing financial difficulties. The Every Fire Survivor’s Network and Consumer Watchdog, which gathered more than 500 firsthand accounts from Eaton and Palisades Fire survivors, report that 70% of insured survivors experienced delays or underpayments that interfered with their recovery.

Those are the exact problems SB 877 and SB 878 were written to fix. Senator Pérez said SB 877 was meant for “fire survivors who had been experiencing reduced claims payments without receiving clear answers about why their payments had been reduced.” SB 878 would have attached a financial cost to delay. Without those changes, survivors who see their rebuild estimates cut or their payments stall are left with the same tools that, by their own accounts, did not work the first time.

Delay is expensive for families who have already lost everything. Many are paying rent on temporary housing while still carrying a mortgage on a home that no longer exists. Each month without a payment widens the gap between what a family was promised and what it can afford to rebuild.

Government action against insurers since the fires also tests the claim that existing rules are sufficient. The California Department of Insurance found that State Farm violated the law in handling Los Angeles fire claims. On August 31, Los Angeles County sued State Farm over its handling of thousands of Eaton and Palisades Fire claims, and in September the county opened an investigation into Farmers Insurance over claim delays, underpayments, and refusals to pay for contamination testing and cleanup. Eaton Fire survivors insured through the California FAIR Plan have also faced delayed and denied smoke and ash claims.

What Wildfire Survivors Should Know

The vetoes do not take away rights policyholders already have. Survivors navigating an insurance claim can take several steps to protect themselves:

• Request your claim documents. California’s standard fire policy already allows policyholders to request claim-related documents, including valuation and loss-adjustment calculations. Ask for them in writing, and ask again if an estimate changes.
• Keep a written record. Save every estimate, letter, and email, and follow up phone calls with a written summary of what was discussed.
• Track your adjuster. Note the name of each adjuster assigned to your claim and the date of any change. SB 876 adds new notice requirements when an adjuster changes.
• Watch for nonrenewal notices. Once SB 1301 takes effect, insurers will generally have to provide 90 days’ notice and an explanation before declining to renew a homeowner’s policy.
• Get help when a claim stalls. If an insurer delays, underpays, or reduces a claim without a clear explanation, an attorney experienced in wildfire and insurance claims can review your options.

For wildfire survivors, these policy decisions carry real consequences. They can determine whether a family has the resources to rebuild or is left to shoulder the cost of recovery alone.

Singleton Schreiber represents Eaton Fire survivors and other wildfire survivors. If you or your family were affected by a utility-caused wildfire, or you are struggling to get your insurance company to pay what you are owed, contact us today.