BILL NUMBER: AB 328 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY MAY 12, 2009
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 amend
Sections 560, 570, 658, 666, 779.19, and 1759.7 of, to add
Section 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.
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 certain types of insurance on risks
or operations in California 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, 10086, 10113.7, 10127.7,
10127.9, 10127.10, 10197, 10199.44, 10199.46, 10235.16, 10235.40,
10509.4, 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 written notice required to be given or
mailed to any person by an insurer relating to
casualty insurance, as defined in Section 1850.4, any
insurance on risks or on operations in this state not exempted by
Section 1851 from the coverage of Chapter 9 (commencing with Section
1850.4) of Part 2 of Division 1, 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 and
shall be sufficient proof of notice. Any notice provided by
electronic transmission shall be treated as if mailed or given for
the purposes of any provision of the Insurance Code .
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 658 of the Insurance Code is amended to
read:
658. Where any admitted insurer, licensed to issue motor vehicle
liability policies as defined in Section 16450 of the Vehicle Code,
refuses to accept an applicant for a good driver discount policy as
defined in paragraph (1) of subdivision (b) of Section 1861.02 or
refuses to issue a good driver discount policy when written
application has been made, and where the applicant meets the criteria
for purchase of a good driver discount policy, the refusing insurer
shall furnish the applicant for insurance a written statement within
10 days of the refusal explaining the reason or reasons relied upon
for denying insurance coverage. Notwithstanding Section 1633.3
of the Civil Code, the written statement explaining the reason or
reasons for denying the coverage may not be electronically
delivered to the applicant unless the application for the good
driver discount was electronically delivered to the insurer.
SEC. 7. Section 666 of the Insurance Code is amended to
read:
666. Where the reason for cancellation does not accompany or is
not included in the notice of cancellation, the insurer shall upon
written request of the named insured, mailed or delivered to the
insurer not less than 15 days prior to the effective date of
cancellation, specify in writing the reason for such
the cancellation. Such
The reason shall be mailed or delivered to the named insured
within five days after receipt of such the
request. Notwithstanding Section 1633.3 of the Civil Code,
the writing specifying the reason for cancellation may not be
delivered electronically to the insured unless the insured
electronically delivered the request to the insurer.
SEC. 6. SEC. 8. 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,
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. SEC. 9. 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 the insurer.