Newsom Vetoes Wildfire Insurance Reforms Following Utility Bailout Clash

SB 877 and SB 878, authored by Senator Sasha Renée Pérez, aimed to curb systemic delays and underpayments that have plagued families since the January 2025 Eaton and Pacific Palisades fires. SB 877 would have mandated that insurers disclose original loss estimates to policyholders, a practice currently shielded from public view. SB 878 sought to enforce deadlines for written claims decisions and impose interest penalties on delayed payouts. Both bills enjoyed overwhelming legislative support, with SB 877 passing the Senate unanimously.

Consumer Watchdog executive director Carmen Balber described the vetoes as a punitive measure against survivors who challenged the governor’s efforts to limit utility liability for future fire damages. While Newsom justified his decision by citing the "Sustainable Insurance Strategy" implemented by Insurance Commissioner Ricardo Lara, consumer advocates argue that those regulations do not address the specific claims-handling abuses targeted by the legislation. Recent data indicates that despite the commissioner's strategy, insurers have requested over $570 million in rate hikes while offering minimal relief to homeowners struggling to secure coverage.