Governor Gavin Newsom signed Senate Bill 876 on September 27, 2026. It is Chapter 656, the Disaster Recovery Reform Act, written by Senator Steve Padilla of Chula Vista and sponsored by Insurance Commissioner Ricardo Lara. This office wrote on September 10, while the bill was still on the governor’s desk. It is law now.
The chaptered bill stops a residential property policy from being issued or renewed unless the applicant is offered extended replacement cost of at least 50% above the primary dwelling limit, and a signed acknowledgment if they turn it down. It also requires an offer of extended additional living expense of at least 50% above the underlying limit. The San Francisco Chronicle reported that the rebuild-estimate rule reaches the California FAIR Plan as well as admitted carriers. Insurers must keep a disaster-recovery plan the Department of Insurance reviews before an emergency. During a declared emergency, penalties for unfair claims practices double. If the company violates the settlement rules, restitution goes to the policyholder. When a new adjuster is assigned, the policyholder gets a status report within 15 days. Building-code upgrade coverage is measured at the time of the rebuild.
The Department’s September 28 announcement says the law takes effect January 1, 2027. Its September 30 package note says pieces phase in, with more of the law effective January 1, 2028. A renewal you sign this month is still on the old form. Read the declarations for extended replacement cost and additional living expense before you assume the 50% offer is already on the policy. If the dwelling limit is thin, the percentage sits on top of a number that was already short.
If this is on your renewal, call the office at (619) 420-8600 or start a quote. We will tell you what the market will actually write.
Sources: California Department of Insurance, September 28, 2026; California Department of Insurance, September 30, 2026; Digital Democracy, chaptered SB 876; Senator Padilla, September 28, 2026.