Coffey Modica founding partner, Michael Coffey, was quoted in Digital Insurance weighing in on the impact of a California proposal to impose stricter smoke claim standards in the wake of last year’s wildfires.

By Michael Shashoua | February 16, 2026

Takeaways:

• Bill broadens fire insurance to cover smoke damage
• Legislature should narrow extent of coverage required, attorney says
• Capping damages might help make coverage viable

A new California bill setting claims standards for smoke damage lacks definitions and cost controls needed to keep insurance affordable in the state, according to an attorney for insurers.

AB 1795, the Smoke Damage Recovery Act, introduced in the state’s assembly on February 10, would require a certain level of remediation of smoke damage to be covered by home insurers, according to a press release from the office of insurance commissioner Ricardo Lara.

The bill would broaden the definition of covered fire damage to include smoke damage, which will raise the cost of insurance, according to Michael Coffey, founding partner at Coffey Modica LLP. Coffey predicts it would lead more home insurers to drop policyholders or leave the market, sending more homeowners to the FAIR Plan insurance of last resort.

“You have people who do not understand insurance making major decisions that have impacts,” he said. “It’s going to make modest smoke cleanup claims into full-scale environmental remediation projects.”

AB 1795 will put more pressure on the FAIR Plan, which is the subject of another recently proposed bill, according to Coffey. “You’re going to have government at some level start absorbing this cost,” he said. “You are not making it more affordable. What you are doing is cost shifting.”

The bill, he added, does not consider “the financial ramifications for people whose real wages are not growing as quickly as they’d like to cover insurance increases.”

Coffey acknowledged that it is possible to cover a lesser portion of smoke damage, but this requires evaluating actuarial data and narrowing the range of coverage to find a workable premium rate for both policyholders and insurers.

Another possibility, he added, is a cap on how much value can be covered by a smoke damage claim. As an example, Coffey said, people with million-dollar or greater homes should have to get supplemental smoke coverage for the value over that threshold.

The proposed bill follows on a report by a task force that Commissioner Lara established in July. The task force will make final recommendations in March, which may figure into amendments to AB 1795, according to the commissioner’s press release.

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Coffey Modica founding partner, Michael Coffey, was quoted in Digital Insurance as one of the insurance experts weighing in on California’s newest efforts to legislate the insurance industry following last year’s wildfires.

By Michael Shashoua | January 19, 2026

California’s new laws governing home insurance and insurers’ handling of wildfire claims are a flawed response to planning and affordability issues, according to experts and attorneys representing both policyholders and insurers.

Home insurance priced based on risk, without causing insurers to operate at a loss, is “different than what’s affordable and low cost,” said Michael Coffey, founding partner at Coffey Modica LLP.

“People in areas where the house has burned down twice over the last 40 years, what’s a fair price for them to pay? Or else you’re having others shoulder their cost,” he said. “How are you going to be able to do it – other than what is considered fair and affordable is going to raise. Over time, certain costs in the mosaic of how you spend your dollar are going to change. That portion of your salary, of your expenses for insurance, is going to drastically increase given the payouts, over the next five to 10 years.”

The new laws and proposed legislation can really only be enforced by homeowners and policyholders who “have the means to hire a lawyer,” said Keith Meyer, partner in the insurance recovery group at Reed Smith in Los Angeles. “There are a lot of people who lost their homes and lost properties, or had properties that are damaged, that can’t afford a lawyer, so they’re just hoping the insurers are going to do the right thing. How do people without the means to hire a lawyer ensure that the insurance companies fulfill their obligations? I just don’t think this goes far enough.”

Economic inequality among homeowners and policyholders dictates how claims are handled, according to Kya Coletta, associate at Reed Smith. “If someone can afford two mortgages, and they refuse to move back into a contaminated home, that’s one thing. If they can afford a lawyer, they can actually push back on insurance tactics where they’re given all legal jargon and policy provisions,” she said. “There’s a lot of disparity in how these types of people are being treated by the insurance companies, and that’s playing a huge role in their claim resolution.”

Lower premiums cannot be practically mandated under insurance actuarial or underwriting models, according to Coffey. Giving an example, he said a premium for a policy that would rebuild a $6 million home cannot be $10,000 or $20,000, and following these models sets that premium between $100,000 to $200,000.

“California has to do a better job of whether they’re going to allow people to rebuild in certain areas or not. They’ve not given enough planning, future thinking to that,” Coffey said. “Maybe there’s some areas where people should not be building houses. They don’t want to say no to people, but it’s just a reality that you probably have to do that. The state should be doing a more comprehensive, overall wildfire mitigation plan.”

California’s new and proposed laws could worsen the home insurance affordability and availability issues, rather than solving them, explained Beth Swanson, insurance analyst at The Zebra. “If it leads to more administrative costs, then those costs could be then passed on to consumers as well. It might cost us in a different way, even to implement and police fees to make sure that they’re happening correctly,” she said.

Smaller insurers that have recently returned to California could be overwhelmed by new requirements, Swanson added. “From the consumer perspective, I completely appreciate what they’re trying to do,” she said. “It could cause them to leave the market again, if they just can’t keep up. If they have to hire more administrative people to coordinate some of these new regulations, that can be tough on the insurer, and they may leave the state again.”

One of the new laws in place is the FAIR Plan Stability Act (AB 226), which authorizes bonds to improve the finances of California’s home insurer of last resort. Meyer pointed out that class action lawsuits have been filed against FAIR, as well as State Farm, over issues with claims from the L.A. wildfires. The California insurance regulator’s probe of State Farm’s handling of claims does not have the resources or staff to be effective, Meyer said.

The number of new FAIR Plan policies is growing more than the number of new policies being issued by private insurers in the state, as facilitated by state insurance commissioner Ricardo Lara’s reforms, advocacy group Consumer Watchdog recently noted.

AB 226 and the other laws and bills are not “honest with what the true cost is going to be,” said Coffey. “They’re just looking to shift it over to insurance companies, which really, if you’re going to keep doing it, there’s going to be a point where you’re going to force them into insolvency, or not writing [policies],” he said. “You can assess homeowners, and jump the prices. You can probably float bonds. You can increase taxes. Every way is going to be a painful solution. There’s no happy solution.”

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Coffey Modica founding partner, Michael Coffey, was quoted in Yahoo Finance as one of the insurance experts providing context and commentary on the pros and cons of state-mandated insurance rate caps.

By Catherine Brock | October 28, 2025

Nearly every U.S. state bans insurance companies from implementing excessive rate increases on home and car coverage. Even with those protections, the average cost of auto insurance has risen far faster than general inflation in the last five years — and some state regulators fear homeowners insurance could soon do the same.

The concern has prompted some lawmakers to consider implementing price caps on insurance companies. While that may sound like a great idea if you are a cash-strapped motorist and homeowner, these regulations can backfire. Find out why and how you can protect your access to home and car insurance going forward.

How insurance rate increases are regulated

Each state defines how it regulates insurance rates. Some require insurance companies to obtain approval before raising their rates, some allow limited rate increases without approval, and others greenlight higher rates as long as they are reported. Illinois is the only state with no rating law.

Most states specify that rate increases cannot be “excessive, inadequate, or unfairly discriminatory,” according to the National Association of Insurance Commissioners.

Learn more: Car insurance rates are climbing. Here are 4 reasons why and 11 ways to save.

Skyrocketing premiums

Still, insurance costs in disaster-prone areas have skyrocketed. According to Michael Coffey, founding partner and insurance defense litigator at Coffey Modica LLP, homeowners insurance costs in some areas of Florida have increased 30%, while premiums in Illinois are up 50% over the last three years. In California, Coffey continues, industry analysts expect a 21% rate increase after the Los Angeles wildfires last January.

Regulatory moves in Illinois, Louisiana, Michigan, and New York

Regulators in Illinois, Louisiana, Michigan, and New York are exploring price caps as a way to protect residents from rising insurance costs. “State governments are feeling pressure to act from voters who feel abandoned and vulnerable,” explained Max Dugan-Knight, climate data scientist at Deep Sky Research.

• Illinois: Lawmakers have proposed The Insurance Rate Fairness and Consumer Protection Law, or SB0268, which requires insurers to request approval to raise rates on homeowners and car insurance.
• Louisiana: Louisiana recently passed House Bill 148, allowing the state insurance commissioner to block any excessive rate increase.
• Michigan: Michigan regulators are reviewing two bills governing insurance rates, SB 328 and SB 329. SB 328 would require insurance companies to reduce auto premiums by 10% or more at the first renewal. SB 329 would eliminate reinstatement fees and ban price increases related to coverage gaps.
• New York: A group of lawmakers announced an investigation into property insurance premium increases in August. The goal is to identify potential regulatory changes for the state.

The case for price caps

The case for limiting insurers’ ability to raise rates is straightforward: The added regulatory oversight can keep prices affordable for ordinary Americans who are struggling with the ever-increasing rates, according to Coffey. Dugan-Knight added that price caps can “offer some short-term relief from otherwise soaring insurance premiums.”

The case against price caps

Longer-term, price caps can reduce competition and limit access to insurance. Dugan-Knight characterized the regulation as a “band-aid solution” because it doesn’t address “a fundamental problem of growing risk.” As Coffey said, “insurers must be able to assess risk and set rates without artificial restraints on the market.”

If they can’t, they could simply stop doing business in the state. “Insurance companies will pull out of states where they can’t charge premiums that keep them solvent,” explained Clearsurance.com insurance and finance expert Melanie Musson.

The trend is already happening in higher-risk states even without legislative changes. According to an Insurance.com survey, more than 15% of homeowners in California, Florida, New York, and Georgia reported receiving policy cancellations because their insurance company left the state.

Stiffer restrictions on insurance rates could expedite these state departures. In turn, higher-risk customers may have more trouble finding insurance across a smaller pool of providers.

Protecting your access to insurance

In this tricky insurance environment, keeping your risk level low is essential. The lower your risk, the cheaper you are to insure. That helps you retain access to coverage even if the pool of insurers in your state shrinks.

Safeguarding your home

As a homeowner, you can manage your risk profile by preventing damage and filing fewer claims. Franklin Manchester, principal global insurance advisor at SAS recommends these moves to safeguard your home:

1. Leak detection: Install a leak detection system to identify water leaks early.
2. Electrical fire detection: A system that monitors your home for electrical faults can protect against wiring-related fires.
3. Brush removal: Keeping the area around your home free from brush can head off fire damage.
4. Roof and window inspections: Monitoring the condition of your roof and windows can prevent water leaks, which can cause water damage, mold growth, wood rot, and electrical damage.
5. Replacement hoses for the washing machine: Manchester says this upgrade can mitigate damage from a claim and may earn you a discount on your policy.

Filing fewer car insurance claims

You can apply the same concept to your car insurance. Try these strategies to file fewer claims.

1. Safe driving: Conservative driving habits can help minimize tickets and accidents.
2. Seat belts: Limit injuries by wearing a seat belt when you drive, without exception.
3. Garage parking: Locked and covered garage parking can minimize weather damage and prevent vandalism.
4. Anti-theft device.:A car alarm or steering wheel lock can prevent theft.
5. Safe distance: Maintaining a healthy distance between you and the car in front of you can help prevent rear-end collisions and chipped windshields.
6. Routine inspections: Keeping your car inspected and maintained reduces your accident and claim risk.

By following these best practices for your home and car, you can limit your claims risk, protect your access to insurance, and — hopefully — qualify for the lowest rates.

State price cap FAQs

Is mandated car insurance reduction real?

Michigan regulators are evaluating a proposal that would require insurance companies to reduce rates at the customer’s first renewal.

How much should your homeowners insurance go up each year?

A report from the Consumer Federation of America estimates that the cost of homeowners insurance has increased 24% over the past three years. That equates to 8% per year, but your experience could be different depending on where you live and other factors.

Is there a cap on insurance increases?

There is no federal cap on insurance increases. States regulate insurance companies. Most require insurance companies to report rate changes and can block excessive increases.

Why did my homeowners insurance double in 2025?

Homeowners insurance rates have been rising due to higher natural disaster risk, inflation, and higher building costs. Factors related to your qualifications may have also contributed. Your rates can rise if you or your neighbors filed more claims, you added onto your home or property, or your credit score declined.

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Coffey Modica founding partner, Michael Coffey, was featured in a bylined article in Fire and Safety Journal Americas examining how wildfire litigation in California impacts utilities, investors and ratepayers beyond the courtroom.

By Michael Coffey | June/July, 2025

In the wake of multiple devastating fires engulfing Eaton, Altadena and Pacific Palisades in January, Los Angeles County has filed a lawsuit against local utlity Southern California Edison, alleging that their equipment caused the Eaton inferno, which destroyed more than 9,400 buildings and displaced over 100,000 residents.

The goal of these public officials is to recoup “at least hundreds of millions of dollars” that will go toward emergency response costs and recovery efforts. However, there may be a hidden cost to this action: significantly higher electric bills.

Decisions in urban planning, infrastructure and business come at a cost, and sooner or later those costs and assessments must be passed down, either to the taxpayers, ratepayers or consumers. Punishing utilities for wildfires is no exception, and there are numerous examples to prove it, California utilities have faced similar lawsuits in the past, including litigation stemming from the 2018 Camp Fire, which resulted in the bankruptcy of Pacific Gas & Electric (PG&E), the state’s largest utility. This led California Governor Gavin Newsom and the state legislature to create a $21 billion wildfire fund, largely paid for by California utility ratepayers and Wall Street investors.

Now, experts warn the damages from these new lawsuits against Edison might deplete the fund, causing Standard and Poor to downgrade Edison’s credit outlook. This will only continue the trend of costs being foisted onto ratepayers. Perhaps that’s why electric rates in California are expected to increase above inflation through 2027. Thus, California leaders’ litigious ways put the state in the dubious position of exacting punishing tolls on hardworking ratepayers and having barely solvent utilities.

Following the 2020 Labor Day fires in Oregon, as ongoing lawsuits against PacifiCorp continue awarding damages to plaintiffs, rates have increased 9.8% for ratepayers since the beginning of the year, and by 50% since 2021.

Even as Los Angeles moves forward once more to penalize Southern California Edison, pinning the blame on the utility for the destructive conflagration, state and county fire investigators have not officially deemed the utility responsible.

By launching costly litigation against one of the state’s largest utilities — before investigators have reached a definitive conclusion — local leaders risk shifting the financial burden onto businesses, homeowners and renters who had no role in causing the fires.

There’s plenty of room for debate over how much blame should go to utilities for failing to properly maintain equipment, which may or may not have initiated some of the fires. Or even whether they should be blamed for not shutting off power as fires raged and moved in record time down valleys and up hillsides. The blame game widens, too, with utilities and other organizations faulting government agencies for not doing their part. Indeed, let’s not ignore the responsibility of government agencies for their accountability and actions.

Are the electric companies responsible for making sure their power lines stay safely connected to the transmission poles? Certainly. And could sparks from fallen electrical lines start fires? Sure, that is possible too.

But are they also responsible for the severe drought conditions, or the dry brush and timber that might cause sparks to spread over tens of thousands of acres of forestry? Are they responsible for the accompanying hurricane-like winds that caused the fires to spread so quickly, making it nearly impossible to escape?

As these investigations continue, dedicated professionals and trained safety experts will draw fair, objective conclusions regarding how much blame a utility should bear for any loss of life, injury or property damage.

What happens next is that politicians and regulators urge hefty penalties against those utilities and their shareholders, with the promise that ratepayers will not bear the cost of those penalties.

Like many large corporations, utilities carry insurance coverage to help cover some of those costs, and utility shareholders — many of whom are California pensioners on fixed incomes — most certainly will see reductions in their dividend checks. Many utilities even pay for excess liability coverage for extremely large settlements.

So, utilities are penalized and take a financial hit; many people are compensated, and assurances are made to make changes in grid maintenance and forestry management. Most people may think that’s where cost impact ends. Not so.

Providing energy to the masses is a collective social endeavor. Everyone plays a relatively small part in making sure electric grids and other energy systems are constructed in a way to make lighting, cooling and heating available to as many people as possible. Contained within that monthly energy bill are funds needed to pay for labor, electric lines, transmission poles, transformers, power-generating facilities and — yes — insurance.

When businesses or large corporations are subject to excessively large liability judgements, their insurance costs go up. And if a utility’s insurance costs rise, that increase is factored in future rate discussions with their regulators and, eventually, their ratepayers.

Make no mistake, exorbitant penalties and injury settlements can significantly impact any company’s financial stability, both in terms of its operational revenues and its ability to borrow for capital investments. The Edison Electric Institute (EEI) notes that an astounding 35% of overall capital investments by electric companies in their transmission and distribution systems go toward grid hardening and resilience.

In other words, the more we penalize a utility, the less they have to invest in grid protection. And the more we penalize businesses to extremes, the less likely those businesses will stay around to serve us the goods and services we expect.

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