By Madeline Shannon
The Center Square

Insurance companies could be compelled to pay homeowners in Southern California who lost their homes in the January 2025 wildfires, if elected leaders have their way.

During a news conference Monday evening at the Capitol, local leaders and homeowners from the Los Angeles area joined Assemblymember Tina McKinnor, D-Inglewood, to announce legislation is being discussed to help property owners whose homes burned down in the Palisades and Eaton fires. Bills would help property owners get the insurance payouts they need to rebuild.

Some legislation, like Senate Bill 876, would require insurance companies to pay out the full cash value of a destroyed home in the event of a wildfire in 30 days. However, opponents worry that if passed into law, the bill would make homeowners’ insurance rates go up because of the excessive costs of such large cash payments on such a tight turnaround, insurance industry experts told The Center Square on Friday.

SB 876 was introduced by Sen. Alex Padilla, D-El Centro. Padilla was not present at the press conference on Monday evening.

One of McKinnor’s bills, Assembly Bill 851, aims to keep potential buyers of damaged or destroyed property in the Los Angeles area’s wildfire-affected communities from making unsolicited offers to buy those lots. The bill was born out of concerns that real estate speculators and predatory buyers would offer to buy wildfire-damaged homes and properties for well under market value, according to a legislative analysis.

That bill was passed in October 2025 and signed into law by Gov. Gavin Newsom.

While some Southern California homeowners have been able to start rebuilding, collecting on insurance claims is the biggest challenge that many homeowners in places like Pacific Palisades still face, local leaders from Los Angeles said during the press conference. Pacific Palisades is a coastal Los Angeles hilltop neighborhood, between the cities of Malibu and Santa Monica.

“We have close to 500 homes that are actively under construction now, so permitting is going fine,” Los Angeles Mayor Karen Bass said during the press conference at the Capitol in Sacramento. “However, the biggest hurdle that Palisadians are facing are problems or challenges with insurance companies who are reluctant to pay, making it very, very difficult for homeowners.”

Banks, too, have posed challenges for those trying to rebuild their homes. Forbearance has been extended on some people’s mortgages, but not for all, Bass said. Those who have mortgages with Bank of America, she said, have received forbearance.

“Bank of America has been the lead in terms of extending the mortgages and putting those payments on the end of a mortgage,” said the mayor, a Democrat who is a former congresswoman. “So instead of a 30-year, they have a 33-year mortgage.”

The Palisades fire, which burned 6,833 structures in January 2025, is the ninth deadliest wildfire in California’s history, according to the California Department of Forestry and Fire Prevention. A neighboring fire that also burned in January 2025 in the Pasadena/Altadena area, the Eaton fire, was even worse. CalFire puts the Eaton fire as the fifth deadliest wildfire in the state’s history.

The two fires burned a total of 37,728 acres, according to a list of the top 20 deadliest wildfires in the state compiled by CalFire.

The Palisades and Eaton fires also killed a total of 31 people, according to CalFire.

“The recovery shouldn’t be worse than the disaster itself,” said Traci Park, a Los Angeles City Council member, during the news conference. “Yet, as we turn into a new year, I’m afraid that as the economic realities set in, this year will be even more difficult than last. We have so many thousands of people that are paying mortgages on homes they can’t live, on lots they can’t afford to rebuild on.”

According to a report released jointly last year by the Los Angeles County Economic Development Corp. and Southern California Leadership Council, Los Angeles-area wildfires in 2025 caused between $28 billion and $53.8 billion. The Palisades and Eaton fires accounted for most of that damage. That report also showed that between $4.6 billion to $8.9 billion in economic output is estimated to have been lost between 2025 and 2029. The report said residents’ incomes fell between $1.9 billion and $3.7 billion.

With the lack of income, local, state and federal government agencies should expect to see roughly $730 million to $1.4 billion in lost tax revenue, the report went on to say.

The Center Square previously reported that 50 commercial permits have been issued as Pacific Palisades businesses rebuild, and plans are forthcoming for reconstruction of a library, a recreation center and a YMCA facility. As communities move forward in rebuilding, local leaders and legislators in Sacramento say they want to ensure insurance payouts are issued to homeowners who are still living on lots that no longer have a house on them.

Students at Palisades Charter High School, which was also damaged in the Palisades fire, have returned to campus. Rebuilding is planned at two burned charter elementary schools that the Los Angeles Unified School District has in Pacific Palisades.

“I’m here to say we will continue to stand with the city of L.A.,” McKinnor said during the press conference. “We’ll make sure L.A. has what it needs to rebuild and make sure that these folks behind us have pride in where they live and they can rebuild their city.”