Due to the extensive loss and damage that wildfires have caused to California insureds in the last several years, the legislature has continued to pass changes to the law that benefit policyholders. We are only a little more than a quarter through 2020 and the legislature continues to focus on expanding policyholders’ rights.
We can expect with the recent COVID-19 issues and the accompanying loss of business income that more relief is hopefully on the way.
The following is proposed legislation that has been introduced this year.
- Public adjuster contracts will be prohibited from allowing a licensee’s fee, commission, or other valuable consideration to be for, or be based upon: (1) any amount paid to the insured by the insurer prior to the date of the written contract or (2) an insurer’s payment for a specific claim or coverage to which the services do not apply. Senate Bill 1002 (2020).
- If an insured decides to purchase property at new location rather than rebuild at the loss location, insurers will be prohibited from deducting the value of land at the new location. Assembly Bill 2703 (2020).
- Insurers will be required to provide six-month extensions to collect the full replacement cost if an insured acting in good faith and with reasonable diligence encounters delays in approval for, or reconstruction of, the insured property that are beyond the insured’s control. Senate Bill 872 (2020).
- An insurer cannot limit or deny payment of the building code upgrade cost or the replacement cost to an insured who purchases any already built structure at a new location. Senate Bill 872 (2020).
- Additional living expense coverage must include all reasonable expenses incurred by the insured to maintain a comparable standard of living. Senate Bill 872 (2020). This coverage is already written into many deluxe policies for high valued properties. This would incorporate it into all homeowners policies.
- Following a total loss of a furnished residence related to a declared state of emergency, insurers will be required to provide a payment for contents of no less than 30% of the policy limit without requiring an itemized claim. Assembly Bill 2703 (2020).
- Residential property insurance will be required to include building code upgrade coverage of no less than 15% of the dwelling coverage policy limits. Assembly Bill 2436 (2020).
- The establishment of the Commission on Home Hardening as an independent unit within the Business, Consumer Services, and Housing Agency. The Commission will be required to develop a three-tiered system of fire prevention levels for structures. Once the levels are established, insurers will be required to offer discounts on insurance covering certain structures. Senate Bill 1199 (2020).
- Admitted insurers that offer or sell residential property insurance will be required to, at a minimum, offer or sell the existing residential property insurance coverage it most commonly offers or sells to the owner of a residence that has an estimated replacement cost consistent with the insurer’s underwriting guidelines, meets to be established minimum standards, and was built before those standards were established. Assembly Bill 2367 (2020).
- Admitted insurers that offer residential property insurance will be required to offer new and renewal residential property insurance policies in areas identified as very high fire hazard severity zones, until the insurer achieves a market participation rate in those areas that is no lower than the insurer’s statewide market participation rate. Assembly Bill 3012 (2020).
We will continue to keep you advised on the status of these bills and other new bills that are introduced.