Legislative Efforts to Combat Insurance Claim Delays and Low-Balling in California

Consumer Watchdog and Eaton Fire Survivors Network

Collaborate with Senator Sasha Perez

On January 7, 2026, in Los Angeles, Consumer Watchdog and the Eaton Fire Survivors Network took a significant step forward by partnering with Senator Sasha Perez to announce two critical legislative bills aimed at addressing the rampant issues of insurance claim delays and low-balling practices that have plagued many homeowners across California, particularly those affected by devastating fires.

The Problem with Insurance Claims

The issue of delayed and denied insurance claims has reached a crisis point for many fire survivors who have experienced catastrophic losses. Carmen Balber, the executive director of Consumer Watchdog, articulated the pressing need for reform, stating, "Insurance delays and denials are standing in the way of recovery. It's time for insurance companies to meet their deadlines, be honest with survivors about what it will cost to recover, and be held accountable when they fail to pay what they owe."

Joy Chen, the executive director of the Eaton Fire Survivors Network, added, "Recovery accelerates when the money shows up. When it doesn't, families are pushed out."

Senator Perez echoed these sentiments, noting that many survivors' recovery processes have been unnecessarily hindered by long-standing issues with insurance company practices. She has introduced two pieces of legislation aimed at establishing accountability and transparency within the insurance industry.

Introducing SB 877: The Fair Claims Practices and Transparency Act

The first bill, known as SB 877, is aimed at enforcing transparency regarding loss estimates related to insurance claims. This act mandates that insurers provide clear documentation detailing how payout figures are calculated. This includes an outline of all changes made, who made those changes, and the reasoning behind them. This transparency will empower homeowners to verify the accuracy of estimates and challenge any discrepancies, thereby ensuring they receive the full benefits they have paid for over the years.

Insurance practices have historically been shrouded in ambiguity, leading to frequent alterations of loss estimates before they reach the policyholders. Investigations have corroborated these suspicions as a CBS 60 Minutes investigation revealed a systemic problem with insurance claims processing, prompting a U.S. Senate committee to address these claims. A recent investigation by the San Francisco Chronicle corroborated similar findings, emphasizing that deceptive practices, including slashing estimates, are alarmingly prevalent in California.

Introducing SB 878: The Insurance Payment Accountability Act

The second piece of legislation, SB 878, targets the common issue of delayed payments from insurance companies. This act aims to strengthen existing regulations around prompt payment of insurance claims, imposing interest penalties for delays and eliminating incentives for insurers to remain uncommunicative regarding claim components. California regulations necessitate that insurers respond to claims timely and pay all undisputed amounts within thirty days. However, evasive practices are rampant, with many insurers leveraging open-ended reviews to bypass these deadlines.

Thompson's case serves as a poignant example of how devastating such practices can be. Claire Thompson, a homeowner and small business owner, shared her experience of paying insurance premiums for nearly a decade only to face a drastically reduced loss estimate that rendered recovery impossible. "The fire damage to my house did not change, but the loss estimate did, making the recovery process insurmountable," she said.

Conclusion: A Step Towards Relief

The efforts spearheaded by Consumer Watchdog, the Eaton Fire Survivors Network, and Senator Perez mark a critical turning point in California’s insurance landscape. By holding insurance companies accountable for their practices, these legislative measures aim to viably improve recovery for homeowners. As Senator Perez stated, "Real transparency and accountability will lead to a faster recovery."

These proposed laws are expected to not only bolster the rights of policyholders but transform the insurance industry into a more responsible sector. The call for action is clear: insurance companies can no longer evade their responsibilities to the very people they serve. As these bills progress, it remains to be seen how they will reshape the future of insurance claims in California and beyond.