California lawmakers have reached a compromise on wildfire liability that preserves survivors’ right to sue a utility if its equipment causes a fire that destroys their home.
The agreement, backed by Governor Gavin Newsom and legislative leaders, abandons key parts of an earlier proposal that would have reduced the financial exposure of Pacific Gas & Electric and other investor-owned utilities.
Wildfire survivors and consumer advocacy groups welcomed the narrower package, saying it keeps responsibility with the companies whose equipment is found to have caused a blaze.
At the centre of the dispute was subrogation, which allows insurers to sue utilities to recover money paid to policyholders. Newsom had sought to restrict that route, but lawmakers rejected the change after warnings it could raise insurance premiums and place more costs on homeowners and local authorities.
Instead, Senate Bill 492 would establish a fast-pay scheme for people affected by a utility-caused wildfire. Claims would be assessed within 60 days of submission, with settlement offers due within a further 30 days, while survivors would remain free to pursue court action if they rejected an offer.
The bill would also prevent private equity firms from buying or funding wildfire claims and prohibit unsolicited legal approaches to potential victims for 30 days after a disaster. Legal fees in insurance subrogation cases would be capped at 10 per cent of the final settlement or judgment.
Utility executives could also lose incentive payments in years when their company causes a catastrophic wildfire resulting in deaths. The legislation would create a statewide strategy for wildfire preparedness and improve the sharing of information about insurance coverage and fire risk.
Mr Newsom said the deal would get money to survivors more quickly and stop hedge funds profiting from wildfire claims. But he also said California’s system required wider reform, including measures to protect the long-term future of the state’s wildfire fund and prevent victims becoming unsecured creditors if a utility enters bankruptcy.
The agreement followed weeks of negotiations amid opposition from survivors of the 2025 Eaton Fire, which killed 19 people in Altadena and was attributed by Los Angeles County fire officials to equipment owned by Southern California Edison.
Joy Chen, executive director of Every Fire Survivor’s Network, said survivors had pressed lawmakers to reject changes that could have limited compensation. Consumer Watchdog also praised the negotiations, while acknowledging that the wider debate over utility liability and electricity costs was not over.
The bill is due to face votes in California’s Assembly and Senate under an urgency procedure. PG&E said it was reviewing the legislation and remained focused on helping survivors recover, improving community safety and protecting customer bills.
