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New Laws Restrict Employers’ Use of AI in the Workplace
California employers that use artificial intelligence to monitor workers, evaluate performance or make employment decisions will face new restrictions under two measures recently signed into law by Gov. Gavin Newsom.
The laws establish requirements for employers using AI and automated technology in workforce reductions, employee surveillance, disciplinary actions and terminations. One takes effect Jan. 1, 2027, while the other takes effect July 1, 2027. Employers should begin reviewing their technology and employment practices now to prepare for compliance.
SB 951
Senate Bill 951 requires employers to provide additional information when AI or automated technology is responsible for all or a substantial part of a mass layoff, relocation or termination covered by California’s Worker Adjustment and Retraining Notification Act.
Cal-WARN generally requires employers with 75 or more employees at a covered establishment to provide 60 days’ advance notice of qualifying layoffs, relocations or closures.
Under the new law, notices involving technology-related displacement must include:
- A statement at the top reading, “This notice is for a technology displacement.”
- The number, job classifications and work locations of affected employees.
- The job functions that AI or automation will replace.
- The specific type or category of technology responsible for the displacement.
The law applies only when an event already triggers Cal-WARN requirements. It does not require a separate notice for every AI-related job elimination.
SB 947
Senate Bill 947 bars employers from relying solely on automated decision systems to discipline or terminate employees.
Under the new law, if an employer primarily relies on an automated system’s recommendation, a human reviewer must corroborate the decision using supporting information, such as performance evaluations, personnel records, work product or witness statements.
If the information cannot be corroborated or the reviewer determines it is inaccurate, incomplete or misleading, the employer cannot use that automated output to support the decision.
Employers must also provide affected employees with a separate written notice explaining that an automated system was primarily used, that a human reviewed the decision and how to request information about the data used.
Employees are protected against retaliation for exercising their rights under the law. Violations can result in civil penalties of $500 per violation and other remedies.
What employers can do
Employers that use AI tools in employment decisions need to keep up with California’s rapidly evolving laws and comply with the new requirements.
Be especially careful when laying off staff whose roles are being replaced by AI or other automated processes.
Those that use these systems to evaluate individual performance or recommend disciplinary actions should have procedures in place by mid-2027 for human review of AI decisions.
Employers should consult their employment law counsel to determine whether these laws affect their personnel procedures and what changes are necessary to comply before the effective dates.
Business Interruption Claims Costs Surge
Business interruption insurance claims are becoming significantly more expensive due to longer recovery periods, supply-chain constraints and inflation.
A new report by Allianz Commercial found that the average BI claim exceeded $950,000 in 2025, up 30% from 2023. BI claims are now about 70% higher than the average associated property damage claim. While the frequency of claims has remained relatively stable, their rising severity highlights the financial risks companies face when operations are disrupted.
The findings underscore the need for businesses to have contingency plans in place in case operations stop or are severely disrupted after an event.
What’s driving the sharp increase
- Longer recovery periods: Businesses are taking longer to rebuild damaged facilities, replace specialized equipment and resume operations, partly due to construction labor shortages.
- Supply-chain constraints: Companies increasingly depend on a limited number of suppliers. Disruptions involving one supplier can halt production across multiple businesses, while shortages of replacement parts delay recovery.
- Inflation: Higher labor, construction material and equipment costs are making repairs and rebuilding more expensive.
- Geopolitical tensions: Conflicts, tariffs and trade disruptions are increasing energy, transportation and material costs while complicating supply chains.
- Rising mitigation costs: Emergency measures such as expedited shipping, temporary production facilities and alternative sourcing are becoming more expensive.
Fire and explosion remain the costliest causes of BI claims, accounting for more than 40% of the total value of claims analyzed by Allianz. Natural catastrophes account for 34%.
The report also highlights growing exposure to cyberattacks and technology outages that can shut down operations without causing physical property damage.
How to reduce exposure
Employers should take the following steps to prevent disruptions and minimize financial losses:
- Develop and regularly test business continuity and contingency plans that identify critical operations and recovery procedures. Assemble a team with representatives from each department to help draft the plans.
- Identify alternative suppliers and maintain backup sources for essential materials.
- Strengthen fire prevention, equipment maintenance and property protection programs.
- Establish backup power, data recovery and cyber security safeguards.
- Arrange alternative production locations and emergency logistics options.
- Maintain sufficient financial reserves to sustain the business during prolonged shutdowns.
Review your coverage
Business interruption insurance, commonly included in commercial property policies or businessowners policies, may cover lost income and continuing operating expenses after a covered event causes physical damage that forces a company to suspend operations.
However, not all BI events result from damage to a company’s facilities. Companies should therefore consider additional protection for other disruptions:
- Contingent BI insurance — May cover lost income when insured physical damage at a supplier’s or customer’s property disrupts the policyholder’s operations.
- Service interruption coverage — Often available through a commercial property policy endorsement, this may cover income losses from qualifying external utility failures, including electricity, water or communications services.
- Cyber BI insurance — May cover lost income and additional expenses resulting from covered cyber incidents, including ransomware attacks and network outages. Some policies also offer protection for disruptions involving third-party technology providers.
Call us to discuss your options and review your coverage limits, waiting periods and maximum indemnity periods to ensure they reflect realistic recovery scenarios.
As business interruption losses grow, adequate insurance combined with effective contingency planning can help you withstand disruptions and recover more quickly.
AI Fuels Surge in Employees Suing Employers Without Attorneys
Generative artificial intelligence is making it easier for workers to sue their employers without hiring an attorney, forcing employers to mount costly defenses against cases that often get thrown out of court.
AI platforms such as ChatGPT and Claude have made it easier for individuals with little knowledge of the law to quickly draft complaints, opposition briefs, discovery requests and other court filings. That has lowered traditional barriers to filing a lawsuit, particularly the cost of hiring an attorney and the difficulty of navigating the legal system.
If an employee files a lawsuit, the employer must mount a defense and incur legal costs even if the lawsuit eventually fails. The trend means employers could face more lawsuits from employees who may be unable to afford an attorney.
The number of plaintiffs representing themselves — known as pro se litigants — has risen sharply. According to LexisNexis’ “Lex Machina 2026 Employment Litigation Report,” the number of unrepresented plaintiffs in federal employment cases more than doubled from 2,052 in 2021 to 4,388 in 2025. Their share of federal employment litigation increased from 9.7% to 16.5% during the same period.
Why employers should be concerned
In the past, an employee who could not find an attorney willing to take a discrimination, harassment or other employment claim might have abandoned the case.
AI is changing that calculation. A worker can describe a dispute to an AI platform and receive help producing documents that resemble professionally drafted legal filings.
The problem for employers is that a lawsuit does not have to succeed to be expensive. A company may still have to hire defense counsel to review allegations, check legal citations, respond to motions, participate in discovery and seek dismissal of the case.
AI-generated filings may also create additional work because they can be lengthy or include incorrect legal arguments and fabricated case citations that defense attorneys must identify and address.
Despite their increasing numbers, pro se plaintiffs have had limited success. Lex Machina reported that in federal employment cases decided on the merits from 2023 through 2025, pro se plaintiffs won fewer than 1% of their cases. Problems such as missing filing deadlines or failing to exhaust administrative remedies frequently contributed to unsuccessful cases.
Pro se employment cases also settle less frequently than cases in which plaintiffs have attorneys, which may mean employers have to defend them longer.
Courts push back on AI misuse
Judges are increasingly encountering AI-generated filings containing fabricated cases and other errors, and some are imposing sanctions.
In March 2026, for example, a federal judge in Illinois imposed a $1,500 sanction on a pro se plaintiff who submitted a 112-page opposition brief containing fabricated case citations. The court also dismissed the case.
In a separate Delaware employment case, a pro se plaintiff made dozens of filings, some of which defendants said contained nonexistent cases and quotations. The court ultimately ordered that the employer would not have to respond to future filings unless the court directed otherwise.
Reducing your exposure
Employers can reduce the risk of employment litigation by maintaining sound workplace practices. Consider the following steps:
- Keep discrimination, harassment, retaliation and complaint policies current and make sure employees understand them.
- Establish procedures for employees to report concerns about discrimination, disability accommodations, discipline or harassment and train supervisors on these procedures.
- Investigate complaints promptly and document the response.
- Apply workplace policies consistently to similarly situated employees.
- Document legitimate business reasons for disciplinary actions, terminations and other significant employment decisions.
Review your coverage
The growth of AI-assisted litigation also underscores the importance of employment practices liability insurance.
EPLI may cover certain claims alleging discrimination, harassment, wrongful termination, retaliation and other employment-related wrongdoing, depending on policy terms. Importantly, coverage may also help with legal defense expenses for covered claims.
If you have questions about this type of coverage, please give us a call.
Lithium-Ion Batteries a Growing Fire Risk to Commercial Properties
Lithium-ion batteries power everything from laptops and power tools to forklifts and electric vehicles. As their use grows, commercial property owners need to consider the fire risks and resulting liability these devices may create.
Although generally safe when used properly, lithium-ion batteries pack significant energy into a small space and can overheat. They can enter “thermal runaway,” a chain reaction that generates intense heat and may result in a fire or explosion.
According to a report by the National Institute of Standards and Technology, plug-in electric vehicle fires are growing by about 45% annually. Lithium-ion battery fires from consumer devices such as laptops, cell phones and tablets are growing by 10% annually.
These fires can spread quickly, burn at extremely high temperatures and release flammable and toxic gases. They can also be difficult to extinguish and may reignite after appearing to be out.
Where the risk comes from
Commercial properties may contain far more lithium-ion batteries than owners realize. In addition to employees’ phones and laptops, batteries may be found in power tools, handheld scanners, forklifts, manufacturing equipment, automated warehouse systems and products stored as inventory.
Employees and tenants may also bring e-bikes and e-scooters onto the premises to charge indoors.
Several factors can increase the likelihood of battery failure, including:
- Overcharging or using an incompatible or damaged charger
- Physical damage from drops, impacts, crushing or punctures
- Exposure to excessive heat
- Manufacturing defects
- Improper storage, handling or disposal
Charging alone may present a heightened risk because batteries generate heat during the process. Damaged batteries can be particularly hazardous.
Reducing the risk
Business and property owners can take steps to reduce their exposure. Start by identifying where lithium-ion batteries are used, charged and stored and incorporating them into fire risk assessments.
Consider establishing designated charging and storage locations away from combustible materials, exits and heavily traveled areas. Inspect batteries and chargers for damage and follow manufacturers’ instructions. Use compatible chargers and equipment from reputable manufacturers. Remove damaged, swollen or overheating batteries from service.
Employees should be trained to recognize warning signs, follow safe charging procedures and know what to do if a battery overheats or catches fire.
Commercial landlords should consider addressing lithium-ion batteries in lease agreements. Rules may cover where e-bikes and scooters can be stored and charged, acceptable safety standards for devices and chargers and prohibitions against damaged or modified batteries. Property managers can reinforce the rules during routine inspections.
For larger installations, such as energy storage systems or EV charging stations, owners may want to involve qualified engineering and fire protection professionals during planning.
Review your insurance
Commercial property insurance may cover fire damage, while general or product liability insurance may provide protection against certain third-party claims. A business interruption policy may cover lost income if a fire temporarily halts operations.
Coverage, exclusions and limits vary, however. Before installing significant battery systems or allowing substantial on-site battery storage or charging, talk with us. We can review your coverage and discuss whether additional risk controls or protection may be appropriate.
Don’t Do Repairs Yourself After Filing a Commercial Property Claim
A company that discovered water damage at one of its rental properties learned an expensive lesson about starting repairs before notifying its insurer.
After finding damage from a plumbing problem, the company hired a handyman and contractors who demolished and repaired the bathroom. It did not report the loss to its insurer until 46 days later.
By the time an insurance adjuster inspected the property, the bathroom had been gutted. Compounding the problem, the contractors had taken no photos or videos of the bathroom before demolition.
A federal court ultimately ruled that the insurer did not owe coverage, finding that the company failed to provide prompt notice and that the demolition prevented the insurer from conducting a thorough investigation.
The lesson for businesses with commercial property insurance is clear: Report property losses promptly and don’t begin permanent repairs without first consulting your insurer. Failing to follow these rules can leave a business out of pocket for a claim that the insurer likely would have paid.
Why prompt reporting matters
Commercial property policies typically require policyholders to provide prompt notice of a loss. What qualifies as “prompt” may depend on the policy, applicable state law and circumstances surrounding the loss.
Waiting can jeopardize a claim, particularly if the delay makes it harder for the insurer to determine what caused the damage, when it occurred and how extensive it was.
That’s why businesses should contact their insurer or broker as soon as possible after discovering property damage, even if they don’t yet know the full extent of the loss.
Don’t destroy the evidence
After a fire, water leak, storm or other loss, a business’s first instinct may be to start cleaning up and rebuilding as quickly as possible. Getting operations back to normal is important, but moving too quickly may create problems with the insurance claim.
The insurer may need to inspect the damaged property before repairs begin. Removing damaged materials, tearing out walls, replacing equipment or otherwise altering the loss scene could eliminate evidence the insurer needs to determine the cause and extent of the damage.
If an insurer cannot adequately investigate because evidence was removed or destroyed, it may dispute portions of the claim, reduce payment or, depending on the policy and circumstances, deny coverage.
Businesses should also avoid signing major repair contracts or authorizing extensive work without discussing the plans with their insurer. A policy may contain requirements governing repairs, documentation and the insurer’s right to inspect damaged property.
There is an important exception: Businesses may need to take reasonable emergency measures to protect property from further damage. These measures may include shutting off water after a pipe breaks, boarding up broken windows or temporarily covering a damaged roof.
Even then, document everything. Whenever it is safe to do so, take extensive photos and videos before moving or discarding damaged property and save receipts and records of emergency expenses.
After a commercial property loss
Businesses should have a claims procedure in place before a loss occurs. Consider the following:
- Take reasonable steps to prevent additional property damage.
- Photograph and video the damage extensively.
- Notify your insurer or insurance broker promptly.
- Preserve damaged property and materials when practical.
- Keep receipts, invoices, estimates and other records.
- Consult your insurer before beginning demolition or permanent repairs.
The desire to reopen quickly after a property loss is understandable. But starting reconstruction before the insurer has had an opportunity to inspect the damage may result in your claim being denied or contested.
When in doubt, call us before authorizing repairs. We can help you understand the claims process and the steps you may need to take to protect your business and your claim.
Cal/OSHA Updates Workplace First-Aid Kit Requirements
The California Occupational Safety and Health Standards Board has approved revisions to its first-aid kit requirements for general industry and construction employers that are expected to take effect Jan. 1, 2027, pending approval by the Office of Administrative Law.
The changes are designed to modernize the rules while requiring employers to consider the size, layout and specific hazards of their workplaces when determining what first-aid supplies they need and where to place them.
For general industry employers, changes to first-aid kit contents are among the most significant. But there are other important changes to be aware of.
No doctor’s approval
Under the existing regulation, first-aid materials generally must be approved by a consulting physician. Under the revised rules, employers may instead provide kits that comply with the ANSI/ISEA Z308.1-2021 Class A standard.
Employers without a compliant kit may have their kit contents determined by an employer-authorized licensed physician or other licensed health care professional.
Additional kits
Employers would have to evaluate employee work locations and workplace hazards to determine how many kits they need.
These requirements may be particularly important for large facilities, workplaces with employees spread across multiple locations and construction sites where crews frequently move between areas.
Unlike current requirements, kits would have to be readily available, and employers must tell workers where they are located. Where practicable, kit locations must also be clearly identified.
Some workplaces may need additional supplies
An ANSI Class A kit provides a baseline, but it may not be enough for every workplace.
Employers must assess their operations for unique, reasonably anticipated and potentially serious hazards that could require specialized first-aid supplies. Depending on the workplace, these could include exposure to chemicals or electricity and risks of burns, heat-related illnesses or serious trauma.
What employers can do now
Employers should review their first-aid programs and consider the following steps:
- Compare existing kits with ANSI/ISEA Z308.1-2021 Class A requirements and update them as needed.
- Evaluate whether you have enough kits and whether employees can reach them quickly.
- Identify kit locations and communicate them to employees.
- Conduct a workplace hazard assessment to identify any need for specialized supplies.
- Establish procedures for routinely inspecting and replenishing kits.
- Update your Injury and Illness Prevention Program and other applicable emergency plans as necessary.
The changes may simplify first-aid compliance for many employers by eliminating the physician-approval requirement when an ANSI-compliant kit is used. But they also put greater emphasis on ensuring supplies meet actual workforce needs and address identified workplace hazards.
New items
The required contents of kits are changing, with four new items and four items being removed. The Board-approved regulations would require most first-aid kits to contain the following:
- Adhesive dressings
- Adhesive tape rolls, 1 inch wide
- Eye dressing packet
- 1-inch gauze bandage roll or compress
- 2-inch gauze bandage roll or compress
- 4-inch gauze bandage roll or compress
- Sterile gauze pads, 2 inches square
- Sterile gauze pads, 4 inches square
- Sterile surgical pads suitable for pressure dressings
- Triangular bandages
- Medical exam gloves (NEW)
- Tweezers
- Cotton-tipped applicators
- Antibiotic treatment, single-use application (NEW)
- Antiseptic, single-use application (NEW)
- Flashlight
- Magnifying glass
- Single-use disposable barrier device for CPR where CPR may be required (NEW)
- Appropriate record forms
- An up-to-date “standard” or “advanced” first-aid textbook, manual or equivalent
AI ‘Botsitting’ Is Costing Employees Hours
AI ‘Botsitting’ Is Costing Employees Hours
Artificial intelligence is supposed to save employees time by taking mundane tasks off their plates and helping them work more efficiently. But a new study suggests workers are spending nearly as much time supervising AI as they spend getting useful work out of it.
A report from workplace AI company Glean found that employees spend 37% of their AI-related time “botsitting” — checking AI’s output, correcting errors, rerunning prompts and providing missing context. That compares with 36% of their AI time spent using the technology to produce work.
In practical terms, for every hour employees spend getting usable work from AI, they spend roughly another hour dealing with its shortcomings, the study concludes. For employers investing heavily in AI, that hidden labor may complicate the technology’s promised return on investment.
Employers may need to reconsider how extensively they integrate AI into their operations if employees spend an inordinate amount of time achieving results similar to those they produced without it.
The human cost of AI
Glean defines botsitting as the work required to make AI usable, including supplying missing context, reviewing its output, debugging mistakes, rerunning prompts and cleaning up answers that sound convincing but are wrong.
The company surveyed 6,000 digital workers and found that 87% use AI at work. About three-quarters said the technology makes them more productive, estimating that they save about 11 hours a week.
However, just 13% said AI has improved their organization’s overall performance. One possible reason for this disconnect is the amount of human oversight the technology requires. According to the report:
- Workers spend an average of 6.4 hours a week botsitting.
- Employees spend more than a quarter of their AI-related time learning how to use the technology and building AI agents.
Employers should therefore be cautious about counting every hour theoretically saved through AI as a genuine productivity gain. If an employee uses AI to complete a task faster but then has to verify facts, correct errors and repeatedly refine the output, some of the time saved is lost.
An invisible workload
Botsitting can also create an HR challenge because much of the work may go unnoticed.
Employees are often expected to incorporate AI into their jobs without having other responsibilities reduced. As a result, reviewing AI-generated output can become an added responsibility rather than a replacement for other work.
Glean found that employees who spend more time refining AI output are more likely to report feeling exhausted by the process. Workers who spend the most time botsitting are also significantly more likely to be looking for another job.
For managers and HR departments, these findings raise questions about workload, burnout and whether employees are receiving enough training and support.
Making AI work for employees
Employers should consider the human labor required when calculating the costs and benefits of AI. Simply purchasing AI tools and encouraging employees to use them may not deliver the expected productivity gains.
Organizations can start by identifying which tasks AI handles reliably and which require substantial human review. Managers should also track how much time employees spend correcting AI output rather than assume it is saving time.
Training is just as important. Employees need guidance on which tools to use, how to write effective prompts, what information can safely be entered into AI systems and when AI output requires additional verification.
Most importantly, businesses may want to view AI as a tool that supports employees rather than one that operates independently. Human judgment remains essential.
How to Deal with the ‘Monday Morning Workers’ Comp Surprise’
The “Monday morning surprise” — the term for when an employee approaches you on the first morning of the working week to report an injury he or she sustained at work on Friday — can be a dreaded situation for an employer.
Nearly all organizations face this at some point and the injury report is likely to trigger an agonizing chain of events, according to a report by the Society of Human Resource Management.
The Monday morning surprise comes with several questions. Is the injury truly work-related?
Could it be a case of cumulative effects? Was this an injury sustained over the weekend, on the employee’s personal time? Do you have evidence to prove it?
The injury could be legitimate (especially if it involves the musculoskeletal system) or due to cumulative exposure, but employers should be wary of instances where an employee clocks out of a shift on Friday with no reported injury and returns on Monday with an injury.
That’s a red flag for workers’ comp fraud.
What not to do
Workers’ compensation fraud experts recommend that you do not:
- Spy on employees — If the employer plays investigator and creates a Big Brother atmosphere of spying on workers, especially when they’re injured, a huge divide in trust is created between employees and managers. When a supervisor functions as a spy, employees are quick to notice and feel devalued.
- Have employees sign a no-injury pledge — While the intent may be positive, to eliminate work-related injuries and illnesses, such an agreement discourages early reporting and could deter a worker from reporting an actual injury that gets worse over time.
- Restrict employees’ personal activities — The range of activities outside of work that could be deemed too risky for employees is impossible to define, and is not legally defensible. An employer who tries to dictate employees’ personal lives will end up with disgruntled workers.
What you can do
First you should put a policy in place that all workplace injuries should be reported to management on the day they occur. That way, the employer can investigate immediately and talk to other staff that may have witnessed the event.
The more time that goes by, the less likely that witnesses will remember anything pertinent to the claim investigation.
As you gather the facts on your injured worker, be sure to address how and when the injury occurred. Did they cite a very specific incident, or was it a gradual onset that worsened over time? If it was gradual, how long ago did the symptoms start? Did the pain stay in the same location, or is it moving around into extremities? Is it worse now after some rest or is it feeling better?
You should ask the employee why they are only reporting it on Monday, instead of Friday when the injury occurred. Often it could be an honest mistake.
Perhaps they told a supervisor who didn’t kick the information to management. Or perhaps they didn’t report it because they didn’t want to go a clinic and thought they’d feel better after the weekend.
But the biggest violation may not be the employee’s fault, it could be yours. If they did not know they were supposed to tell you about a near-miss or incident-only injury, that’s due to poor communication on your part. Workers need to know that should any incident happen, they are required to report it.
End-of-week employee injury statement
One way to address the Monday morning surprise is to develop an “End-of-Week Employee Injury Statement.”
Your accounting department can attach something like the following statement to each employee’s paycheck:
I have not received or witnessed any injury during the course of this week’s work with [Employer Name Here.]
Employees would be required to complete the form, sign it and return it to their supervisor.
The benefits of such a reporting program include:
- Employees reporting workplace injuries in a timely manner.
- Improved management-worker communications.
- Strengthened accident prevention and employee safety.
- The ability to reconcile injuries that have occurred and to alert supervisors and management of hazardous conditions and unreported injuries.
- The identification of witnesses who should be interviewed during accident investigations.
It should be noted, however, that the use of an end-of-week statement would not be defensible against a claim for benefits at the Workers’ Compensation Appeals Board, but it could be used to establish the condition of the employee leading up to the at-work injury.
How to Avoid Having Your Business Property Damage Claim Denied
Whether you own and insure your office or other business property, or insure the office or building you rent, you will obviously want to make sure that you have an automatic sprinkler system or some other fire detection or suppression system in place in case of fire.
You’ll also want to make sure that your fire alarms are working and that you have service contracts for periodic inspections of your facilities to identify fire and other risks.
But what happens if there’s a fire in your building and your sprinkler system fails? Well, when you make your insurance claim you could be in for a nasty surprise if your policy has a “protective safeguards endorsement.”
This endorsement would deny coverage if you had failed to maintain and ensure that your system is in proper working order.
If your policy contains a protective safeguards endorsement, and you fail to adequately maintain any of the protective safeguards at your commercial building or manufacturing facilities, and you suffer a loss caused by fire, coverage for the fire loss can be denied by your insurance company.
Also, if you knowingly turn off or suspend any of the safeguards, even if it is for routine maintenance, and fail to notify the insurance company and a loss occurs during the suspension, coverage can be denied.
Because of the potential coverage gaps that can be created by this endorsement, it’s very important for you to know whether it’s attached to your policy — and if it can be removed. If it can’t, you need to understand your responsibilities in order to avoid having your claim rejected.
These are types of protective safeguards that could be in the endorsement:
- Automatic sprinkler system
- Automatic fire alarm
- Security service
- Service contract
- Automatic commercial cooking exhaust and extinguishing system
- Any other protective system described in the endorsement schedule.
Protective safeguards horror stories*
Burmac Metal Finishing Co. — An Illinois appellate court ruled that an insurer was justified in denying coverage for a fire and explosion because Burmac had capped between three and 19 automatic sprinkler systems out of 600 at its industrial building without notifying the insurer. The court ruled that this action constituted failure to maintain the system, justifying denial of coverage.
Y2K Textile, Inc. — A California appeals court ruled that an insurer had properly denied coverage for fire loss when the protective safeguards endorsement required the insured to maintain a contract with a duct-cleaning service and the insured never obtained a copy of such a contract.
* Source: Faegre Baker Daniels blog
Insurers will often offer a premium discount or a credit, or an otherwise uninsurable property may qualify for coverage, if the property policy includes a protective safeguards endorsement.
Typically, a policy will identify the protective safeguards the endorsement covers and then it will have the following key clause:
“As a condition of this insurance, you [the insured] are required to maintain the protective devices or services listed in [this endorsement].”
The endorsement will spell out that the insurer will not pay for the loss or damage that is caused by or resulting from a fire if, prior to the fire, the policyholder:
- Was aware that any of the protective safeguards had been suspended or were impaired prior to the fire, and that the policyholder had failed to inform the insurer.
- Failed to maintain the protective safeguards in complete working order.
That means that you have two duties under such an endorsement:
- The duty to notify the insurer of any suspensions or impairments of any safeguards.
- The duty to maintain the safeguards.
Policies will also include instructions for when you must inform your insurer of a suspension of a safeguard. Most endorsements will include the following safe-harbor provision:
“If part of an Automatic Sprinkler System is shut off due to breakage, leakage, freezing conditions or opening of sprinkler heads, notification to us will not be necessary if you can restore full protection within 48 hours.”
What you should do
If you have an insurance policy for your property and you are unsure whether it includes a protective safeguards endorsement, you can call us. If your policy does include it, we can work with you and the insurer to see if can be removed, if you’re so inclined.
California Adopts New Zone 0 Wildfire Standard
California has approved a statewide Zone 0 wildfire standard that establishes requirements to reduce combustible materials immediately around homes and commercial buildings in areas with elevated wildfire risk.
The California Board of Forestry and Fire Protection approved the regulations on Aug. 19, 2026. The rules apply to properties in State Responsibility Areas and Very High Fire Hazard Severity Zones within Local Responsibility Areas and affect an estimated 2 million homes.
Zone 0 covers the first five feet around a structure, an area that can play an outsized role in whether a home ignites during a wildfire. Wind-driven embers can land next to a house and ignite mulch, leaves, firewood, plants, fencing and other combustible materials. Flames can then spread to the structure.
Research has found that maintaining an ember-resistant area around a home can significantly increase its chances of surviving a wildfire.
A smaller noncombustible area
The final rules are less restrictive than the standard originally envisioned under a 2020 state law that called for an ember-resistant zone extending five feet from structures.
Instead, the new regulations create a noncombustible safety area extending at least one foot from a structure or to the edge of its eaves, whichever is greater.
The following are prohibited within the one-foot safety area:
- Vegetation
- Firewood
- Bark mulch
- Wood chips
- Dead leaves
- Branches
Vegetation must be kept at least two feet from windows, doors and vents and five feet from attached decks and similar features.
The rest of Zone 0 is considered a low-combustibility area. Some well-maintained plants, ground cover, grass and trees may remain if they meet the requirements.
Trees may remain within Zone 0 but must be maintained. Among other requirements, dead wood and lower branches that could act as “ladder fuels” should be removed. Branches must be kept away from roofs, eaves and chimneys, and roofs and gutters should be kept free of combustible debris.
The regulations also address fences and outbuildings. Where a fence attaches to a home, a five-foot noncombustible section will eventually be required. Sheds and outbuildings within Zone 0 must have noncombustible exterior roofs and walls.
The three zones
Zone 0 is the area closest to the home. California’s defensible-space system generally extends 100 feet from a structure.
Zone 0: 0 to 5 feet — This is the ember-resistant area immediately surrounding the home. The goal is to prevent embers from igniting nearby materials and spreading fire to the structure.
Zone 1: 5 to 30 feet — This area focuses on creating a lean, clean and green environment by removing dead vegetation, trimming trees and separating plants to slow the spread of fire.
Zone 2: 30 to 100 feet — This zone focuses on reducing fuels by mowing grasses, removing fallen branches and creating adequate spacing between trees and shrubs.
Local governments may adopt stricter requirements based on their communities’ wildfire risks.
When the rules take effect
The regulations are expected to take effect for new construction in September. Existing homeowners will have a phased compliance period, with some requirements taking effect within three years and full compliance required within five years.
Once the official grace period for your fire-hazard tier expires, penalties will apply for continued noncompliance:
- Initial infractions: These typically result in an administrative fine of $100 to $500 per day until the violation is corrected.
- Severe misconduct: Repeated refusal to clear the zone after multiple warnings can be treated as a misdemeanor, potentially leading to higher court-ordered fines.
While state and local agencies may be lenient early on, California home insurance companies are not. Many private insurers have already adopted Zone 0 benchmarks. Failing a private insurance inspection or not clearing your five-foot perimeter can result in an immediate premium increase, policy nonrenewal or claim denial.
If you are making defensible-space improvements partly for insurance purposes, check with us before starting major work. We can help you understand your insurer’s requirements and whether documentation, photographs or an inspection is necessary to receive credit for the improvements.