Lloyd’s Market Association Bulletin

Following the recent wildfires in California and the subsequent issuance of regulatory guidelines by the California Department of Insurance (CDI), the Joint Specie Committee (JSC) has sought clarification from Lloyd’s America regarding the applicability of these guidelines to policies typically written in the Fine Art and Specie market.

For your reference, the relevant statute authorising the moratorium (California Insurance Code 675.1) is attached.

Summary of the California Insurance Moratorium Provision

• Non-Renewal and Cancellation Restrictions
  Insurers are prohibited from issuing non-renewals or cancellations of residential property insurance policies for properties located within a declared fire perimeter, for a period of one year following the disaster. CDI issues guidance detailing the zip codes to be included in moratoria.
• Mandatory Renewal After Total Loss
  In the event of a total loss to a residential property due to a declared disaster, insurers are required to offer policy renewals for at least the next two annual renewal periods.
• Premium Payment Grace Period
  Insurers must provide a 60-day grace period for the payment of premiums on residential property insurance policies covering properties located within the affected disaster area.

Clarification on the California Insurance Moratorium
The moratorium issued by the Californian Department of Insurance applies only to residential property insurance policies. It does not extend to standalone Fine Art or Specie policies that do not insure a residential property. While the law allows for adjustments to coverage, these provisions relate specifically to residential property insurance. Please refer to the attached 2025 Annual Notice on Significant California Laws on Residential Property Insurance Policies, including those related to a Declared State of Emergency.

Definition of Residential Property Insurance
“Policy of residential property insurance” means a policy insuring individually owned residential structures of not more than four dwelling units, individually owned condominium units, or individually owned mobile homes, and their contents, located in this state and used exclusively for residential purposes or a tenant’s policy insuring personal contents of a residential unit located in this state.

“Policy of residential property insurance,” does not include any of the following: (A) Insurance for real property or its contents used for any commercial, industrial, or business purpose, except a structure of not more than four dwelling units rented for individual residential purposes. (B) A policy that does not include any of the perils insured against in a standard fire policy.

Clarification on ‘Contents’ and Fine Art/Specie
In response to a query raised by the JSC, it was confirmed that the term “contents” within the residential property insurance definition applies only when those contents are included within a policy that insures a residential property. Therefore, standalone Fine Art or Specie policies that do not insure a residential property fall outside the scope of the Moratorium.

Next Steps
This information is intended to help underwriters assess any potential exposure or regulatory implications within their policy portfolios. Please note that further guidance may be issued by the California regulator in due course but in the meantime, the JSC will continue to monitor developments and share updates as necessary.

Each underwriting entity remains individually responsible for ensuring compliance with applicable local regulations.

Shazia Rennison

Secretary to the Joint Specie Committee and Technical Executive, Underwriting
shazia.rennison@lmalloyds.com