BILL NUMBER: AB 2022	INTRODUCED
	BILL TEXT


INTRODUCED BY   Assembly Member Gaines

                        FEBRUARY 17, 2010

   An act to amend Sections 10102 and 10103.5 of the Insurance Code,
relating to property insurance.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 2022, as introduced, Gaines. Property insurance: residential
disclosure.
   Existing law requires that residential property insurance policies
do not become effective unless the named insured is provided with a
copy of the California Residential Property Insurance Disclosure
which sets forth a description of types of coverage, such as actual
cash value coverage, guaranteed replacement cost coverage, and
related coverage, as specified. Existing law also requires every
California Residential Property Insurance Disclosure be accompanied
by a California Residential Property Insurance Bill of Rights.
   This bill would revise the mandatory language of the California
Residential Property Insurance Disclosure to simplify and rearrange
the description of types of coverage, and to include additional
information concerning insurance limits. It would also revise and
simplify the California Residential Property Insurance Bill of
Rights. It would require both disclosures to be in at least 12-point
type.
   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 10102 of the Insurance Code is amended to read:

   10102.  (a) The disclosure required by Section 10101 shall be in
no less than 10-point typeface and shall be provided prior to or
concurrent with, the application for a policy of residential property
insurance. In the event that an application is made by telephone, an
insurer that mails a copy of the disclosure within three business
days shall be in compliance with this section. For policies issued on
or after July 1, 1993, the agent or insurer shall obtain the
applicant's signature acknowledging receipt of the disclosure form
within 60 days of the date of the application. When the insurer or
agent establishes delivery of the disclosure form by obtaining the
signature of the applicant or insured, or when an insurer or agent
provides the applicant with the disclosure form and the applicant
does not return a signed acknowledgment of receipt within 60 days of
the date it was provided, there shall be a conclusive presumption
that the insurer or agent has complied with the disclosure
requirement of this chapter. The insurer or agent shall have the
burden of demonstrating in accordance with California Rules of
Evidence that the disclosure was provided to the applicant or
insured. A signature shall not be required at the time of renewal.
   If the disclosure is mailed to the named insured or applicant, it
shall be mailed to the mailing address shown on the policy of
residential property insurance or to the address requested by the
applicant. First-class mail shall be deemed adequate for proof of
mailing. The insurer shall have the burden of demonstrating in
accordance with California Rules of Evidence that the disclosure was
mailed to the applicant or insured.
   The disclosure shall contain the following language  in no
less than 12-point type  :

      CALIFORNIA RESIDENTIAL PROPERTY INSURANCE DISCLOSURE
    
   This disclosure is required by California law (Section 10102 of
the Insurance Code). It describes the principal forms of insurance
coverage in California for residential dwellings. It also identifies
the form of dwelling coverage you have purchased or selected.
 
   This disclosure form contains only a general description of
coverages and is not part of your residential property insurance
policy. Only the specific provisions of your policy will determine
whether a particular loss is covered and, if so, the amount payable.
Regardless of which type of coverage you purchase, your policy may
exclude or limit certain risks.  
   READ YOUR POLICY CAREFULLY. If you do not understand any part of
it or have questions about what it covers, contact your insurance
agent or company. You may also call the California Department of
Insurance consumer information line at: 1-800-927-4357. 

   The cost to rebuild your home may be very different from the
market value of your home since reconstruction is based primarily on
the cost of labor and materials. Many factors can affect the cost to
rebuild your home, including the size of your home, the type of
construction, and any unique features. Please review the following
coverages carefully. If you have questions regarding the level of
coverage in your policy, please contact your insurance agent or
company. Additional coverage may be available for an additional
premium.  

* * * * * * * * * * * * * * * * *  

  NOTICE OF INCOMPLETE TEXT: The Residential Dwellings Coverage
  disclosure form appears in the hard-copy publication of the
  chaptered bill. See Sec. 1 of Chapter 137, Statutes of 2006.
 

* * * * * * * * * * * * * * * * *  [GRAPHIC INSERT HERE:
SEE PRINTED VERSION OF THE BILL]
   (b) The agent or insurer shall indicate on the disclosure form
which  category of coverage  coverages  the
applicant or insured has selected or purchased.
   (c) The disclosure statement may contain additional provisions not
 in conflict with or in derogation of  
conflicting with, annulling, or detracting from  the foregoing.
   (d) Following the issuance of the policy of residential property
insurance, the insurer shall provide the disclosure statement to the
insured on an every-other-year basis at the time of renewal. The
disclosure required by this section may be transmitted with the
material required by Section 10086.1.
   (e) No policy of residential property insurance may be initially
issued on and after January 1, 1993, as guaranteed replacement cost
coverage if it contains any maximum limitation of coverage based on
any set dollar limits, percentage amounts, construction cost limits,
indexing, or any other preset maximum limitation for covered damage
to the insured dwelling. The limitations referred to in this section
are solely applicable to dwelling structure coverages. Endorsements
covering additional risks to the insurer's dwelling structure
coverage may have internal limits as long as those endorsements are
not called guaranteed replacement cost coverage.
   (f) On and after July 1, 1993, no policy of residential property
insurance may be renewed as guaranteed replacement cost coverage if
it contains any maximum limitation of coverage based on any set
dollar limits, percentage amounts, construction cost limits,
indexing, or any other preset maximum limitation for covered damage
to the insured dwelling. The limitations referred to in this section
are solely applicable to dwelling structure coverages. Endorsements
covering additional risks to the insurer's dwelling structure
coverage may have internal limits as long as those endorsements are
not called guaranteed replacement cost coverage.
   (g) Coverage provided for building code upgrades by a policy of
residential property insurance shall be applicable to building codes,
ordinances, standards, or laws only to the extent that those codes,
ordinances, standards, or laws do not impose stricter standards on
the property on the basis of the level of insurance coverage
applicable to the property.
   (h) The disclosure required by Section 10101 shall also be
provided to the mortgagor in the event that a policy is forced placed
by an insurer at the request of a mortgagee. In  such
  those  cases, neither the insurer nor the
mortgagee shall be required to obtain a signature from the mortgagor.
No disclosure shall be required to be provided with respect to
blanket policies issued to a mortgagee, and designed to provide
interim coverage for losses occurring prior to the mortgagee
obtaining knowledge of the lapse of the policy and prior to placement
of a policy on behalf of the mortgagor. 
   (i) On and after July 1, 1994, insurers shall add to the
disclosure, in no less than 10-point type the following statement:
 
   This disclosure form does not explain the types of contents
coverage (furniture, clothing, etc.) provided by your policy. Some
policies do not replace contents with new items, but instead, only
pay for the current market value of an item. If you have any
questions, contact your insurer or agent.
 
   (j) No later than December 1, 2005, the commissioner shall report
to the Governor and the Legislature on the status of the issues
regarding residential property insurance and the effectiveness of the
California Residential Property Insurance Disclosure. 
  SEC. 2.  Section 10103.5 of the Insurance Code is amended to read:
   10103.5.  (a) Every California Residential Property Insurance
Disclosure shall be accompanied by a California Residential Property
Insurance Bill of Rights. If the insurer provides the insured with an
electronic copy of a policy, the bill of rights may also be
transmitted electronically. 
   (b) The California Residential Property Insurance Bill of Rights
shall be plainly printed in no less than 10-point type. The bill of
rights shall contain the following:  
      "California Residential Property Insurance Bill of Rights
 
The largest single investment most consumers make is their home and
related property. In order to best protect these assets, it is wise
for consumers to understand the homeowner's insurance market.
Consumers should consider the following:  
  Read your policy carefully and understand the coverage and limits
provided. Homeowner's insurance policies contain sublimits for
various coverages such as personal property, debris removal,
additional living expense, detached fences, garages, etc. 

  Keep accurate records of renovations and improvements to the
structure of your home, as it could affect your need to increase your
coverage.  
  Maintaining a list of all personal property, pictures, and video
equipment may help in the case of a loss. The list should be stored
away from your home.  
  Comparison shop for insurance, as not all policies are the same and
coverage and prices vary.  
  Take time to determine the cost to rebuild or replace your property
in today's market. You can seek an independent evaluation of this
cost.  
  You may select a licensed contractor or vendor to repair, replace,
or rebuild damaged property covered by the insurance policy.
 
  An agent or insurance company may help you establish policy limits
that are adequate to rebuild your home.  
  Once the policy is in force, contact your agent or insurance
company immediately if you believe your policy limits may be
inadequate.  
A consumer is entitled to receive information regarding homeowner's
insurance. The following is a limited overview of information that
your insurance company can provide:  
  The California Residential Property Insurance Disclosure. 

  An explanation of how your policy limits were established.
 
  The insurance company's customer service telephone number for
underwriting, rating, and claims inquiries.  
  An explanation for any cancellation or nonrenewal of your policy.
 
  A copy of your policy.  
  The toll-free telephone number and Internet address for reporting
complaints and concerns about homeowner's insurance issues to the
department's consumer services unit.  
  In the event of a claim, an itemized, written scope of loss report
prepared by the insurer or its adjuster within a reasonable time
period.  
  In the event of a claim, notification of a consumer's rights with
respect to the appraisal process for resolving claims disputes.
 
  In the event of a claim, a copy of the Unfair Practices Act and a
copy of the Fair Claims Practices Regulations.  
The information provided herein is not all inclusive and does not
negate or preempt existing California law. If you have any concerns
or questions, the officers at our Consumer Hotline are there to help
you. Please call them at 1-800-927-HELP (4357) or contact us at
www.insurance.ca.gov."  
   (b) The California Residential Property Insurance Bill of Rights
shall be plainly prepared in no less than 12-point type. The Bill of
Rights shall contain the following: 
 ""California Residential Property Insurance Bill
 of Rights 
 INSURANCE COMPANY RESPONSIBILITIES: 
 As a Residential Property Insurance 
 policyholder, you have the right to: 
 46 The insurance company's customer 
 service telephone number for underwriting, 
rating, and claims inquiries. 
 46 A written explanation for any 
 cancellation or nonrenewal of your policy. 
 46 A copy of the insurance policy. 
 46  An explanation of how your policy 
 limits were established. 
 46  In the event of a claim, an 
 itemized, written scope of loss report prepared 
 by the insurer or its adjuster within a 
 reasonable time period. 
 46  In the event of a claim, a copy 
 of the Unfair Practices Act and a copy of the 
 Fair Claims Settlement Practices Regulations. 
 46  Select a licensed contractor or 
 vendor to repair, replace, or rebuild damaged 
 property covered by the insurance policy. 
 46 In the event of a claim, 
 notification of a consumer's rights with respect 
 to the appraisal process for resolving claims
 disputes. 
 46 An offer of coverage and premium 
 quote for earthquake coverage. 
 The information provided therein is not all 
 inclusive and does not negate or preempt 
 existing California law.'' 


   (c) (1) The bill of rights shall be distributed by all insurers
licensed to sell residential property insurance in this state.
   (2)  (A)    If the insurer under
a personal lines residential property insurance policy reports
claims history or loss experience of insureds under those policies to
an insurance-support organization, the insurer shall include the
following disclosure in the California Residential Property Insurance
Bill of Rights:

   "This insurer reports claim information to one or more claims
information databases. The claim information is used to furnish loss
history reports to insurers. If you are interested in obtaining a
report from a claims information database, you may do so by
contacting:
   (Insert the name, toll-free telephone number, and, if applicable,
Internet Web site address of each claims information database to
which the insurer reports the information covered by this section)"

   (B) This paragraph shall become operative on July 1, 2006.