BILL NUMBER: AB 2022 ENROLLED
BILL TEXT
PASSED THE SENATE AUGUST 20, 2010
PASSED THE ASSEMBLY MAY 20, 2010
AMENDED IN ASSEMBLY MAY 11, 2010
INTRODUCED BY Assembly Member Gaines
FEBRUARY 17, 2010
An act to amend, repeal, and add Sections 10102 and 10103.5 of the
Insurance Code, relating to property insurance.
LEGISLATIVE COUNSEL'S DIGEST
AB 2022, 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, on July 1, 2011, 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.
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:
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. [GRAPHIC INSERT HERE: SEE PRINTED VERSION OF THE BILL]
(b) The agent or insurer shall indicate on the disclosure form
which category of coverage the applicant or insured has selected or
purchased.
(c) The disclosure statement may contain additional provisions not
in conflict with or in derogation of 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 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.
(k) This section shall remain in effect only until July 1, 2011,
and as of that date is repealed, unless a later enacted statute, that
is enacted before July 1, 2011, deletes or extends that date.
SEC. 2. Section 10102 is added to the Insurance Code, 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:
[GRAPHIC INSERT HERE: SEE PRINTED VERSION OF THE BILL]
(b) The agent or insurer shall indicate on the disclosure form
which coverages the applicant or insured has selected or purchased.
(c) The disclosure statement may contain additional provisions not
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 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) This section shall become operative on July 1, 2011.
SEC. 3. 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."
(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.
(d) This section shall remain in effect only until July 1, 2011,
and as of that date is repealed, unless a later enacted statute, that
is enacted before July 1, 2011, deletes or extends that date.
SEC. 4. Section 10103.5 is added to the Insurance Code, 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 prepared in no less than 10-point type. The Bill of
Rights shall contain the following:
""California Residential Property Insurance
Bill of Rights
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:
44 The insurance company's customer
service telephone number for
underwriting, rating, and claims inquiries.
44 A written explanation for any
cancellation or nonrenewal of your policy.
44 A copy of the insurance policy.
44 An explanation of how your policy
limits were established.
44 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.
44 In the event of a claim, a copy
of the Unfair Practices Act and, if
requested,
a copy of the Fair Claims Settlement Practices
Regulations.
44 In the event of a claim,
notification of a consumer's rights with
respect to
the appraisal process for resolving claims
disputes.
44 An offer of coverage and premium
quote for earthquake coverage, if eligible.
A consumer is also entitled to select a
licensed contractor or vendor to repair,
replace, or rebuild damaged property covered by
the insurance policy.
The information provided herein is not all
inclusive and does not negate or preempt
existing California law. If you have any
concerns or questions, contact your agent,
broker, insurance company, or the California
Department of Insurance consumer information
line at (800) 927-HELP (4357) or at
www.insurance.ca.gov for free insurance
assistance.''
(c) (1) The bill of rights shall be distributed by all insurers
licensed to sell residential property insurance in this state.
(2) 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)"
(d) This section shall become operative on July 1, 2011.