BILL NUMBER: AB 328 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY APRIL 27, 2009
AMENDED IN ASSEMBLY APRIL 13, 2009
INTRODUCED BY Assembly Member Charles Calderon
FEBRUARY 18, 2009
An act to amend Section 1633.3 of the Civil Code, and to
add Section 38.5 to to amend Sections 560, 570,
779.19, and 1759.7 of, to add Se ction 38.5 to, and to add
Article 6 (commencing with Section 580) to Chapter 6 of Part 1 of
Division 1 of, the Insurance Code, relating to electronic
transactions.
LEGISLATIVE COUNSEL'S DIGEST
AB 328, as amended, Charles Calderon. Electronic transactions:
exceptions.
Existing law generally permits parties to contract to conduct
transactions by electronic means. Existing law excepts specific
transactions regarding from this permission, including various
provisions regarding insurance.
This bill would remove specified insurance provisions from the
exception to the general authorization that parties may contract to
conduct transactions by electronic means , including, among
others, provisions relating to notice of cancellation, notice of
nonrenewal, proof of mailing, time of offer, and continuation of
coverage .
Existing law generally requires, unless otherwise provided, that
any required notice related to insurance transactions may be made by
mail, as specified.
This bill would authorize any required notice related to casualty
insurance to be made electronically with the consent of the parties,
as specified.
Existing law requires insurers to pay certain covered claims by
check or draft, as specified.
This bill would generally allow an insurer, with the consent of
the insured, to pay covered claims by an electronic funds transfer,
as specified. This bill would prohibit an insurer from requiring an
insured to consent to payment by an electronic funds transfer, as
specified.
Vote: majority. Appropriation: no. Fiscal committee: no.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 1633.3 of the Civil Code is amended to read:
1633.3. (a) Except as otherwise provided in subdivisions (b) and
(c), this title applies to electronic records and electronic
signatures relating to a transaction.
(b) This title does not apply to transactions subject to the
following laws:
(1) A law governing the creation and execution of wills, codicils,
or testamentary trusts.
(2) Division 1 (commencing with Section 1101) of the Uniform
Commercial Code, except Sections 1107 and 1206.
(3) Divisions 3 (commencing with Section 3101), 4 (commencing with
Section 4101), 5 (commencing with Section 5101), 8 (commencing with
Section 8101), 9 (commencing with Section 9101), and 11 (commencing
with Section 11101) of the Uniform Commercial Code.
(4) A law that requires that specifically identifiable text or
disclosures in a record or a portion of a record be separately
signed, including initialed, from the record. However, this paragraph
does not apply to Section 1677 or 1678 of this code or Section 1298
of the Code of Civil Procedure.
(c) This title does not apply to any specific transaction
described in Section 17511.5 of the Business and Professions Code,
Section 56.11, 56.17, 798.14, 1133, or 1134 of, Sections 1350 to
1376, inclusive, of, Section 1689.6, 1689.7, or 1689.13 of, Chapter
2.5 (commencing with Section 1695) of Title 5 of Part 2 of Division 3
of, Section 1720, 1785.15, 1789.14, 1789.16, 1789.33, or 1793.23 of,
Chapter 1 (commencing with Section 1801) of Title 2 of Part 4 of
Division 3 of, Section 1861.24, 1862.5, 1917.712, 1917.713, 1950.5,
1950.6, 1983, 2924b, 2924c, 2924f, 2924i, 2924j, 2924.3, or 2937 of,
Article 1.5 (commencing with Section 2945) of Chapter 2 of Title 14
of Part 4 of Division 3 of, Section 2954.5 or 2963 of, Chapter 2b
(commencing with Section 2981) or 2d (commencing with Section 2985.7)
of Title 14 of Part 4 of Division 3 of, or Section 3071.5 of, the
Civil Code, subdivision (b) of Section 18608 or Section 22328 of the
Financial Code, Section 1358.15, 1365, 1368.01, 1368.1, 1371, or
18035.5 of the Health and Safety Code, Section 662, 663, 664,
667.5, 673, 677, 678, 678.1, 786, 10113.7, 10127.7, 10127.9,
10127.10, 10197, 10199.44, 10199.46, 10235.16, 10235.40, 10509.4,
or 10509.7 10509.7, 11624.09, or 11624.1
of the Insurance Code, Section 779.1, 10010.1, or 16482 of the
Public Utilities Code, or Section 9975 or 11738 of the Vehicle Code.
An electronic record may not be substituted for any notice that is
required to be sent pursuant to Section 1162 of the Code of Civil
Procedure. Nothing in this subdivision shall be construed to prohibit
the recordation of any document with a county recorder by electronic
means.
(d) This title applies to an electronic record or electronic
signature otherwise excluded from the application of this title under
subdivision (b) when used for a transaction subject to a law other
than those specified in subdivision (b).
(e) A transaction subject to this title is also subject to other
applicable substantive law.
(f) The exclusion of a transaction from the application of this
title under subdivision (b) or (c) shall be construed only to exclude
the transaction from the application of this title, but shall not be
construed to prohibit the transaction from being conducted by
electronic means if the transaction may be conducted by electronic
means under any other applicable law.
SEC. 2. Section 38.5 is added to the Insurance Code, to read:
38.5. Any notice required to be given to any person by an insurer
relating to casualty insurance, as defined in Section 1850.4, may be
provided by electronic transmission pursuant to Title 2.5
(commencing with Section 1633.1) of Part 2 of Division 3 of the Civil
Code, if each party has agreed to conduct the transaction by
electronic means pursuant to Section 1633.5 of the Civil Code. The
affidavit of the person who initiated the electronic transmission,
stating the facts of that transmission, is prima facie evidence that
the notice was transmitted.
SEC. 3. Section 560 of the Insurance
Code is amended to read:
560. Every insurer issuing an automobile collision policy, as
defined in subdivision (d) of Section 660, or a policy for
comprehensive coverage for a motor vehicle, as defined in Section
11580.07, shall, in the event of damage to a covered automobile by
collision or otherwise and the election by the insurer to have such
automobile repaired by the repairer, make payment by check or draft,
payable to the repairer or to the named insured and the repairer,
jointly, or, with the consent of the insured and repairer, by an
electronic funds transfer to the repairer, not later than 10
days subsequent to receipt of an itemized bill or invoice covering
repairs authorized by the insurer which have been satisfactorily
completed. The provisions of this section shall include all cases
where the insured has received actual notice that the repairer is
doing work pursuant to a contract approved by the insurance company
in which case the payment shall include the name of the repairer.
SEC. 4. Section 570 of the Insurance
Code is amended to read:
570. Except in the event that the insurer has previously obtained
a release on a loss, each insurer which issues, amends, or renews,
on or after January 1, 1975, a policy of insurance covering repair or
reconstruction work on commercial, industrial, or residential real
property and appurtenances thereon, shall, in the event of covered
work being performed by a licensee under the Contractors License Law
(Chapter 9 (commencing with Section 7000) of Division 3 of the
Business and Professions Code), make payment by check or draft
directly to the contractor performing the work, or, with the
consent of the insured and the contractor, by an electronic funds
transfer to the contractor performing the work, and not to the
owner of the property, in every case in which all of the following
conditions are present and the insurer has actual knowledge thereof:
(a) The property owner of record has, in a writing signed by him
and transmitted to the insurer, stated all of the following:
(1) The work completed meets with his satisfaction.
(2) The insurer, upon direct payment to the contractor, is
released from liability.
(3) The writing was not completed or signed by him until after all
work was completed.
(b) The property owners of record, the named insured, and any loss
payee have consented in writing to such direct payment and release
from liability.
(c) The completed work has been certified by the appropriate
public agency or authority as conforming to existing building,
electrical, and construction codes.
(d) Each subcontractor of the contractor, and each materialman, to
whom direct payment is to be made by the insurer has executed, and
filed of record, releases of any and all claims, including, but not
limited to, mechanic's liens, which the subcontractor and materialman
might have against the property or any appurtenance thereof, the
property owners of record, the named insured, and any loss payee
named in the policy, for any work the subcontractor performed, or
material the materialman furnished, upon the property under the
contract for which such payment is being made. The property owner or
the contractor, as the case may be, shall submit to the insurer
proof, satisfactory to it, of such execution and filing prior to the
insurer's making any direct payment provided for by this article.
SEC. 5. Article 6 (commencing with Section 580) is
added to Chapter 6 of Part 1 of Division 1 of the
Insurance Code , to read:
Article 6. Electronic Payment of Claims
580. Every insurer required to make payment for a loss, may, with
the consent of the insured, make payment by an electronic funds
transfer. An insurer may not require an insured to consent to payment
by an electronic funds transfer.
SEC. 6. Section 779.19 of the Insurance
Code is amended to read:
779.19. All claims shall be promptly reported to the insurer or
its designated claim representative, and the insurer shall maintain
adequate claim files. All claims shall be settled as soon as possible
and in accordance with the terms of the insurance contract.
All claims shall be paid either by draft drawn upon the insurer
or , by check of the insurer , or,
with consent of the insured, by an electronic funds transfer
to the order of the claimant to whom payment of the claim is due
pursuant to the policy provisions, or upon direction of such claimant
to one specified.
No plan or arrangement shall be used whereby any person, firm or
corporation other than the insurer or its designated claim
representative shall be authorized to settle or adjust claims. The
creditor shall not be designated as claim representative for the
insurer in adjusting claims; provided, that a group policyholder may,
by arrangement with the group insurer, draw drafts or checks in
payment of claims due to the group policyholder subject to audit and
review by the insurer.
SEC. 7. Section 1759.7 of the Insurance
Code is amended to read:
1759.7. All claims paid by the administrator from funds collected
on behalf of the insurer shall be paid only on checks or drafts of
, or, with the consent of the insured, by an electronic funds
transfer from, and as authorized by such
the insurer.