Governor Newsom warns that lenders must provide timely and fair payouts to LA fire survivors

What you need to know: Governor Newsom continues to advocate for LA fire survivors, warning that lenders who fail to help with recovery by needlessly denying or delaying access to insurance funds are subject to state enforcement, and clarifying that state damage assessments are not a basis for denying insurance claims.

SACRAMENTO - Governor Newsom today took action to inform survivors of the Eaton and Palisades fires of their rights regarding funds to rebuild, and warned lenders against practices that may deny or delay homeowners' access to insurance proceeds needed for rebuilding. More than 18 months after the LA firestorms, survivors continue to face difficulty accessing coverage.

Survivors' ability to access the insurance coverage they've paid for is foundational to recovery. Financial institutions have a critical role to play as families move from immediate stabilization to rebuilding their homes, their businesses, and their lives. The last thing survivors need is unnecessary red tape, delays, and barriers standing between them and the relief they deserve.

Governor Gavin Newsom

Across Los Angeles County, over 11,000 single-family homes and 13,000 housing units were severely damaged or destroyed, with thousands more affected by smoke damage.

Rebuilding is well underway, with nearly 2,500 homes now under construction. According to recent survey data from the Department of Angels, financial barriers are the most-cited obstacle to recovery, with 39% of survivors citing high out-of-pocket costs, and 30% citing delayed or insufficient insurance payouts as factors influencing their decision to rebuild or repair their homes.

However, many survivors report challenges accessing relief funds due to delayed release of insurance funds held in escrow by their mortgage lenders during construction. Today, in a letter to associations representing banks, credit unions, and mortgage lenders, he warned that too many survivors report that lenders add unnecessary red tape to rebuilding by slowing the disbursement of insurance funds during construction. Holding funds in escrow is a standard part of the rebuilding process, but the scope of this disaster has shown that expanded capacities and accelerated processes are needed. The Governor directed the new Business and Consumer Services Agency and Department of Financial Protection and Innovation (DFPI) to collect complaints about delayed or denied access to funds, and warned that such practices may violate consumer protection laws. Consumers may file a complaint online.

Separately, the Governor, CAL FIRE and the California Governor's Office of Emergency Services (Cal OES) issued a letter informing survivors of their rights and warning insurers not to delay or deny survivors access to insurance funds based on a home's damage classification. The letter clarifies that a home's classification in CAL FIRE's Damage Inspection (DINS) database is not a basis for delayed or denied access to insurance proceeds. Insurers have an obligation to review and investigate a property owner's claim independent of state damage assessments. The DINS database plays a critical role in emergency response and community recovery, collecting information to inform emergency response and help identify needs for mitigation, rebuilding, and long-term resilience planning. Its purpose is not to govern eligibility for individual relief funds.

The letter notes that the California Department of Insurance will investigate any complaints that an insurer is using the DINS database to delay, reduce, or deny a claim. The letter also informs survivors that key state and federal relief programs, such as FEMA programs and CalAssist, do not require that a home be classified as damaged or destroyed under DINS for an affected household to qualify for relief.

Governor Newsom continues to advocate for survivors and their ability to access coverage. Last year, Governor Newsom sent a letter to the FAIR Plan warning that its handling of survivors' smoke-damage claims was unscrupulous and unfair and may ultimately be illegal - urging it to resolve fire survivors' claims with the speed and fairness FAIR Plan customers deserve.

Governor Newsom has been squarely focused on stabilizing and modernizing California's home insurance market, especially as climate change drives more severe wildfire risk. Since 2019, Governor Newsom has:

• Strengthened California's FAIR Plan: Expanded capacity and authorities of the FAIR Plan as the insurer of last resort.
• Advanced insurance market reforms: Issued an executive order in 2023 urging the California Department of Insurance to modernize rate-setting rules, incorporate climate risk, and ensure insurers write more policies, leading to reforms like using forward-looking catastrophe models and improving the FAIR Plan, all under the "Sustainable Insurance Strategy" to stabilize the market and expand coverage. As a result, nine homeowners' insurance companies (Farmers, Mercury, CSAA, USAA, Horace Mann, Pacific Specialty, California Casualty, Travelers, AAA SoCal), including six of the top 10 insurer groups, committed to stay and grow in California.
• Invested in wildfire risk reduction: Committed billions of dollars to forest management, prescribed burns, and vegetation treatment, and expanded home hardening and community wildfire mitigation programs.
• Maintained strong consumer protections: Preserved public review and justification requirements for rate increases and ensured continued oversight by one of the nation's strongest insurance regulatory frameworks as California shifts from crisis response to long-term market stability.

• CA - $1,616 | National - $2,543 | Texas - $4,085 | Florida - $7,136

Accelerating recovery and protecting communities

Many survivors lost community spaces, historic neighborhood pillars, and schools that made communities feel like home. Governor Newsom and his administration have worked hand-in-hand with survivors to help communities recover and rebuild stronger. The Governor has helped accelerate the rebuilding of communities by:

• Fast-tracking permitting and rebuilding. Governor Newsom issued an executive order to streamline the rebuilding of homes and businesses - suspending permitting and review requirements under the California Environmental Quality Act (CEQA) and the California Coastal Act. The Governor also issued an executive order further cutting red tape by reiterating that permitting requirements under the California Coastal Act are suspended for rebuilding efforts and directing the Coastal Commission not to issue guidance or take any action that interferes with or conflicts with the Governor's executive orders. Additionally, the Governor issued an executive order removing bureaucratic barriers, extending deadlines, and providing critical regulatory relief to help fire survivors rebuild, access essential services, and recover more quickly.
• Providing tax and mortgage relief to those impacted by the fires. California postponed the individual tax filing deadline to October 15 for Los Angeles County taxpayers. Governor Newsom suspended penalties and interest on late property tax payments for a year, effectively extending the state property tax deadline. The Governor also worked with state - and federally chartered banks that have committed to providing mortgage relief for survivors in certain ZIP codes, and later extended and expanded that relief through legislation. He also announced a $125 million mortgage relief package for homeowners impacted by the Los Angeles fires and other recent disasters, which was recently adjusted to reach even more fire survivors.
• Suspending building codes. In addition to issuing multiple executive orders, Governor Newsom has also helped speed permitting and rebuilding by suspending implementation of new building codes for residents rebuilding from the fires to create certainty and avoid the need to modify applications and lengthen the permitting process. This includes allowing homeowners who built their homes to the standards in the 2019 Building Code to use their previously approved plans, and a suspension of building codes that would have gone into effect on January 1, 2026.
• Safeguarding survivors from speculators and price gouging. Governor Newsom expanded restrictions to protect survivors from illegal price hikes on rent, hotel and motel costs, and building materials or construction. The Governor also issued an executive order to protect firestorm victims from predatory land speculators making aggressive and unsolicited cash offers to purchase their property.
• Creating a new Disaster Rebuilding Fund. Through housing affordability reforms the Governor signed into law yesterday, $100 million in funding will be directed to reduce financing costs for homeowners rebuilding after disasters, helping affected households repair or reconstruct homes more quickly and affordably.
• Getting kids back in the classroom. Governor Newsom signed an executive order to quickly assist displaced students in the Los Angeles area and bolster schools affected by the firestorms.

Trump abandons LA fire survivors

Governor Newsom has made multiple requests since February 2025, when President Trump promised he would "take care" of survivors. However, the federal government has yet to approve these funding requests and continues to delay delivering FEMA funding that was already approved.

The federal government plays a critical role as a partner to the state in this long-term recovery effort. Funding in this supplemental appropriation would:

• Fund the rebuilding of schools, childcare centers, homes, and vital community facilities.
• Keep small businesses open, support the economy, and maintain jobs.
• Restore damaged water systems, underground and harden critical infrastructure, and improve sidewalks, streets, and traffic safety.