SB523 - Fire insurance.

Amended IN Senate January 05, 2026 Amended IN Senate March 24, 2025 CALIFORNIA LEGISLATURE— 2025–2026 REGULAR SESSION Senate Bill No. 523 Introduced by Senator Seyarto February 20, 2025 An act to add and repeal Section 10089.56 of Section 2059 to the Insurance Code, relating to insurance. LEGISLATIVE COUNSEL'S DIGEST SB 523, as amended, Seyarto. California Earthquake Authority: commission. Fire insurance. Existing law generally regulates classes of insurance, including residential property insurance. Existing law prescribes the standard form for fire insurance policies covering property. This bill would, under a homeowners’ insurance policy, authorize an insurer to differentiate the risk of an internal fire from the risk of an external fire for the purposes of determining coverage. The bill would define terms for purposes of this provision. Existing law establishes the California Earthquake Authority (CEA), administered under the authority of the Insurance Commissioner and governed by a 3-member governing board, to transact insurance in this state as necessary to sell policies of basic residential earthquake insurance. Under existing law, the CEA’s governing board is advised by an appointed advisory panel. This bill would require the CEA to establish a commission, to convene no later than April 1, 2026, to consider expanding the authority. The bill would require the commission to be composed of the board members or their designees. The bill would also require the commission to explore specified topics, including financial estimates for statewide earthquake threats. The bill would require the commission to conclude its work no later than April 1, 2027, and to submit a report to the Legislature no later than June 1, 2027, on the feasibility of creating a disaster insurance program in California. The bill would repeal these provisions on June 1, 2031. Digest Key Vote: MAJORITY Appropriation: NO Fiscal Committee: YES NO Local Program: NO Bill Text The people of the State of California do enact as follows: SECTION 1. Section 2059 is added to the Insurance Code, to read: 2059. (a) Under a homeowners’ insurance policy, an insurer may differentiate the risk of an internal fire from the risk of an external fire for the purposes of determining coverage. (b) For purposes of this section, the following definitions apply: (1) “External fire” means a fire that started outside of the insured property. An external fire may include, but is not limited to, wildfires or fires that began on a neighboring property that then spread to the insured property. (2) “Internal fire” means a fire that started within the insured property. An internal fire may include, but is not limited to, kitchen fires, electrical fires, or fires caused by negligence on the insured property. SECTION 1. Section 10089.56 is added to the Insurance Code , immediately following Section 10089.55 , to read: 10089.56. (a) The authority shall establish a commission, to convene no later than April 1, 2026, to consider expanding the authority. (b) The commission shall be composed of board members or their designees. (c) The commission shall explore both of the following: (1) Financial estimates for statewide earthquake threats. (2) Potential financial support from federal authorities in a worst-case scenario. (d) The commission shall conclude its work no later than April 1, 2027, and shall provide a report to the Legislature no later than June 1, 2027, on the feasibility of creating a disaster insurance program in California. (e) The commission shall be supported by authority staff. The department may provide additional staff if necessary. (f) (1) A report to be submitted pursuant to this section shall be submitted in compliance with Section 9795 of the Government Code. (2) Pursuant to Section 10231.5 of the Government Code, this section is repealed on June 1, 2031.