New Rules
From Santa Barbara to Sacramento: New Rules Could Leave Homeowners Exposed
If you live in California, especially in wildfire-prone regions such as the hills near me above Santa Barbara, or if you have followed the Southern California Edison litigation, there is a conversation happening in Sacramento right now that you should know about.
There is no bill yet. But a proposal reported in early August may change how much wildfire victims can recover from the utilities whose equipment sparks these fires. If it materializes as currently described, it could significantly rewrite what you would be entitled to if you are ever faced with the aftermath of a California wildfire.
What Is Happening
The Governor's office appears to be working on legislation that would reduce what utilities pay after their equipment causes a fire. As of this writing, there is no bill and no legislative text. But the direction is clear from the pieces that have been reported.
The plan seems to build on a report the California Earthquake Authority delivered earlier this year, which the Legislature required as part of Senate Bill 254 in 2025. That report recommended eliminating inverse condemnation for utility-caused wildfires through a constitutional amendment or, if that path proved too difficult, capping and reforming utility liability in several other ways, among other recommendations.
Both approaches point to the same result: less compensation for damages from utilities to the people, insurers, and local governments harmed by wildfires their equipment started.
What This Means for a Homeowner
Reporting has identified at least four areas that matter directly to wildfire victims.
1. Caps on Non-Economic Damages
Non-economic damages cover losses that are real but hard to put a number on. These include things like pain and suffering, emotional distress, loss of enjoyment of a home, and general disruption to your family's life. Early reporting on the proposal describes limits on these damages, with some reports stating a possible cap of $150,000 for certain victims.
For a homeowner who lost a family home, decades of belongings, and a sense of safety in their own neighborhood, a fixed cap can be a serious limit on what compensation they are entitled to. Similarly, an individual who is physically hurt as the result of a catastrophic wildfire could have their rights to compensation curtailed by such a cap. Non-economic damages are often the difference between a settlement that helps a family rebuild their life and one that only replaces the walls.
2. Ending Insurance Subrogation
Subrogation is not a word most of us are familiar with. It is a technical term with a simple meaning: When your insurance company pays out on your homeowner's policy, it can then turn around and sue the individual or entity that caused your insurance claim payout to recover what it paid. That process is called subrogation, and it is one of the largest sources of utility payouts after a major fire.
Reporting suggests the Governor’s plan would eliminate or sharply limit those insurer claims against utilities. Supporters maintain that this preserves more money for individual victims. Critics note that removing subrogation reduces total pressure on utilities to prevent fires in the first place, and that the savings do not automatically flow to homeowners.
It also changes the math for insurers, which can affect what future coverage costs and what companies are willing to write policies in fire-prone areas. If you have attempted to get your home insured in the last several years, you likely have seen policy premiums skyrocket and very few insurers willing to issue policies for California properties. Ending insurance subrogation rights could further increase insurance costs or result in additional insurance companies moving out of the state.
3. Limits on Attorneys' Fees
Reports also state there may be limits on attorneys' fees in wildfire cases. For a homeowner, this is not simply a lawyer's concern. Wildfire cases are complex and expensive to investigate, often costing millions of dollars in expert fees for cause and origin experts, fire spread experts, damage experts and more. The attorneys leading the investigation and case bear the cost of these fees up front, only getting paid if and when a case resolves, sometimes years later.
If fees are capped low enough, the practical effect is that fewer firms will take smaller or more difficult cases. Larger and more clear-cut claims will still find representation. Marginal and complex ones may not. It is obviously impossible to predict what the future holds, but if a final bill advances with these limits in place, many homeowners may lose a potential avenue for recovery if attorneys cannot justify the financial exposure putting on such a complex case would bring given caps on their potential compensation.
4. A "Fast Pay" Program That Trades Your Right to Sue
One of the proposals being discussed is a state-run "fast pay" program that in theory would allow impacted residents to move on with their lives more quickly. However under the plan, wildfire victims could apply for a quicker payout from the state Wildfire Fund but this benefit may come with a significant downside that may not immediately be obvious. In exchange for a rapid settlement, impacted residents would generally give up their right to sue the utility for the same losses.
For a family that lost everything and needs cash to get through the next year, a faster payment is genuinely valuable. Litigation takes time, sometimes years, and no one wants to stretch out that period longer than they have to. But signing away the right to sue is a permanent decision. Once you accept the fast-pay amount and release the utility, you cannot come back later if the number turns out to be far below what you would have been compensated in a more traditional lawsuit.
This is exactly the kind of decision that deserves careful legal review before signing, not a rushed choice made under the pressure of insurance gaps and rebuilding costs.
Why the Timing Matters
The California Legislature is finishing its 2026 session in the coming weeks. If a bill is going to move this year, the text will likely appear soon and move quickly, possibly in only 72 hours. Reform packages that touch this many interests, from insurers to trial lawyers to utilities to local governments, should not be negotiated in private and land in public form very late in the process, but this is what is happening in California right now.
That means the period between "outline" and "law" is short, and it is the period when facts change fastest. What is described this week may not be exactly what any final bill looks like, or even what is reported tomorrow. Some provisions may get softer. Others may get harder. What is unlikely to change is the overall direction: less recovery available to wildfire victims than under the current framework.
The existing framework itself is already generous to utilities in important ways. Under a 2019 law, a utility that meets certain requirements can access a state Wildfire Fund that covers damages above a $1 billion threshold, and the utility is presumed to have acted prudently unless a state finding says otherwise. The proposals under discussion would layer additional protections on top of that framework.
What does this mean for you?
A few practical thoughts, based on what is on the table right now.
If you are impacted by a wildfire, document everything. Photos of damage, receipts, insurance letters, contractor bids, and personal notes about the fire and its aftermath are more valuable the earlier they are preserved. This is true under any legal framework, but especially true when the framework itself may be changing.
Do not wait to talk to a lawyer if you already have a claim. Existing claims are usually treated under the law in effect when the case is filed, but that is not always guaranteed, and no one can predict exactly what effects the new bill may have or how transition provisions in a new bill will be written. Getting your file organized and your options reviewed sooner is better than waiting to see what happens.
Be careful with any offer that asks you to sign away your rights in exchange for a quick payment. That may be a fair trade for your situation, or it may not, but it is not a decision to make without carefully reading the fine print and getting outside advice.
Read past the headline on any news story about "reform." Some of these proposals sound consumer-friendly on the surface. Cutting out the insurance companies or prioritizing victims can poll well while still shrinking what an individual victim actually recovers. Getting the details right is important for California homeowners to protect themselves in the case of a wildfire.
Where This Goes Next
I will keep watching this closely and post updates here as bill text becomes public. In the meantime, if you have questions about how any of this could affect a case you are already thinking about, or about a recent fire in California and the Western states, I am always happy to talk.
The best time to understand your options is before the rules change, not after.