CA Could Allow Wildfire Victims, Insurers To Sue Big Oil For Damages

CALIFORNIA — Democratic lawmakers in California introduced a new bill Monday that would allow insurers and victims of natural disasters to sue fossil fuel companies for damages.

The legislative proposal comes on the heels of multiple wildfires that have caused potentially hundreds of billions of dollars of damage in Southern California earlier this month.

Sen. Scott Wiener (D-San Francisco), the bill's lead author, says residents and insurance companies shouldn't be the only ones to bear these costs.

"Californians are paying a devastating price for the climate crisis, as escalating disasters destroy entire communities and drive insurance costs through the roof," Wiener said. "By forcing the fossil fuel companies driving the climate crisis to pay their fair share, we can help stabilize our insurance market and make the victims of climate disasters whole."

If approved, California would become the first state in the nation to allow such lawsuits, according to Wiener.

READ MORE: Newsom Bends Coastal Zoning Rules To Help Fire Victims Quickly Rebuild

SB 222, the Affordable Insurance and Climate Recovery Act, aims to improve insurance affordability by "shifting the burden" of increased costs away from ratepayers and onto the fossil fuel industry.

"From last year’s floods to the fires in LA, we know that the fossil fuel industry bears ultimate responsibility for fueling these disasters," Wiener posted on X. "The fossil fuel companies knew this was going to happen. They had the studies decades ago, suppressed them [and] obstructed policy changes to transition away from fossil fuels [and] toward clean energy."

In response, the Western States Petroleum Association took aim at Weiner on Monday, lambasting the bill in a new statement.

“The announcement of today’s proposal is the latest installment of an ongoing effort to scapegoat our industry," the WSPA wrote in a statement. "We need real solutions to help victims in the wake of this tragedy, not theatrics."

California is scrambling to contend with the aftermath of the Eaton and Palisades fires, which together have resulted in potentially more than $250 billion in economic losses, according to the latest estimations from AccuWeather and JP Morgan.

What's more, U.S. insurance stocks fell on Friday as analysts said insurance losses from the fires could reach $20 billion, Reuters reported.

As thousands remain displaced, with countless homes and businesses destroyed, the early-January firestorm may turn out to be the costliest disaster in U.S. history, with only 2005's Hurricane Katrina trailing behind it. The hurricane cost around $200 billion.

And just last year, atmospheric river storms hammered Northern California, causing $4.5 billion in damage.

Sen. Sasha Renée Pérez, one of the bill's authors, says the Eaton Fire destroyed more than 9,000 structures in her district, leveling nearly the entire town of Altadena, where thousands of residents remain affected.

“Our communities have never seen anything like this in urban Los Angeles. The reality is that climate change is here and will continue impacting communities everywhere," Pérez said. said. "What makes this worse is decades ago, Big Oil knew this would be our future, but prioritized lining their own pockets at the expense of our environment and the health of our communities."

While policymakers on opposing sides of the political divide have long been at odds about climate change, the escalating frequency of natural disasters has placed immense strain on California's insurance market.

In response to rising risks, some major insurers have raised premiums by as much as 48%, according to Weiner's office. Meanwhile, swaths of homeowners have had to contend with insurance companies refusing to renew fire policies. By 2024, California ranked fourth nationwide for insurance nonrenewals, trailing only Florida, Louisiana and North Carolina.

And as private insurers exit the market, Weiner's office says families are being directed to the state's FAIR Plan. But that plan is now overburdened, which could force residents to shoulder the costs.

SB 222 would require the FAIR Plan to exercise a right to sue oil and gas companies on behalf of injured policyholders to recover any claims paid toward climate-driven disasters.

“This bill will be much-needed relief for the victims of the wildfires who cannot recover their full losses through their insurance policies and for the insurance companies who have to pay claims caused for disasters that the fossil fuel industry created,” Jamie Court, President of Consumer Watchdog said.