Consumer Protection
California Orders Lenders to Explain Wildfire Claim Payout Delays
Following more than 160 complaints since the January 2025 Eaton and Palisades fires, regulators are demanding written accounting of insurance funds held by lenders.
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California’s Business, Consumer Services and Housing Agency and the Department of Financial Protection and Innovation (DFPI) have ordered financial institutions to submit written reports explaining delays and denials in releasing wildfire insurance claim payouts, according to a report by ABC7 News.
The regulatory order follows more than 160 complaints submitted to the state by wildfire survivors since the Eaton and Palisades fires in January 2025 who reported difficulties accessing relief funds needed to rebuild their homes.
Written Accounting of Insurance Funds Held by Lenders
According to ABC7 News, the two state agencies are requiring financial institutions to provide transparency on whether mortgage lenders “delayed payments to survivors, failed to provide a timely appeal process for decisions about releasing funds, or held insurance money even after a loan was fully paid.”
Under the directive, lenders must submit a written report detailing both the size and the distribution of the money they received from insurance companies to pay wildfire survivors.
State officials encouraged consumers who believe a financial service provider has violated state laws governing insurance claim disbursements to file a formal complaint with the California Department of Financial Protection and Innovation.
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