Amended in Senate June 12, 2014

Amended in Assembly April 21, 2014

California Legislature—2013–14 Regular Session

Assembly Bill No. 2064

Introduced by Assembly Member Cooley

February 20, 2014

An act to begin insert amend Sections 10089.6 and 10089.26 of, to end insert amend, add, and repeal Sections 10083 and 10086 of, to amend, repeal, and add begin delete Sections 10083, 10086, 10089.6, 10089.26, and end delete begin insert Section end insert 10089.28 of, and to add Section 10089.42 to, the Insurance Code, relating to earthquake insurance.

LEGISLATIVE COUNSEL’S DIGEST

AB 2064, as amended, Cooley. Earthquake insurance: mandatory offer.

Existing law prohibits a policy of residential property insurance from being issued or delivered or initially renewed in this state unless the named insured is offered coverage for loss or damage caused by an earthquake, as provided, and, if the offer of earthquake coverage is accepted, requires the insurer to provide certain disclosures based on whether the policy was issued by the California Earthquake Authority (CEA).

Existing law created the CEA, to be administered under the authority of the Insurance Commissioner, and authorized it to transact insurance in this state as necessary to sell policies of basic residential earthquake insurance in the manner provided. The CEA has no authority to transact any other type of insurance business. The CEA’s operating expenses are capped at 3% of its premium income.

This bill would revise and recast these provisions by revising the disclosure language an insurer is required to use in offering earthquake coverage and making the contents of that disclosure language dependent upon whether the insurer is a member of the CEA or not and by requiring begin delete insurers who are members of the CEA to provide their end delete insureds begin insert to be provided end insert with specified disclosures with regard to coverage of losses, the CEA’s liability limitations, and premiums concurrent with the issuance or renewal by the CEA of a residential earthquake insurance policy. The bill would begin delete also prohibit member insurers from issuing, delivering, or renewing a policy of residential property insurance in this state, unless the named insured is provided information on the availability of residential earthquake insurance from the CEA within 60 days of issuance or renewal of the insured’s residential insurance policy, as provided. The CEA would be required to prepare the forms of the information required for use by member insurers and submit the forms to the commissioner for approval. The insurers would be authorized to provide the notice electronically or by mail. end delete begin insert require a participating insurer, at least once each year, to provide each of its residential property insureds with marketing documents produced at the CEA’s expense. The bill would make these provisions operative on January 1, 2016. end insert

This bill would increase the cap on the CEA’s operating expenses to not more than begin delete 5% end delete begin insert 6% end insert of its premium income, and exclude certain expenses and costs from being classified as operating expenses. begin delete The bill would also require that a CEA residential earthquake insurance policy be effective upon receipt by the member insurer of both the completed CEA-approved application for the policy, signed by the applicant, and either the annual premium or the first installment of the annual premium. end delete

begin delete

This bill would also make these provisions operative on July 1, 2015.

end delete

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

SECTION 1.  

Section 10083 of the Insurance Code, as amended
by Section 12 of Chapter 369 of the Statutes of 2013, is amended
to read:

10083.  

(a) The offer of coverage required by Section 10081
may be made prior to, concurrent with, or within 60 days following
the issuance or renewal of a residential property insurance policy.
If the offer of coverage 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 on the application. The offer may
be made electronically pursuant to Section 38.5. The offer of
earthquake coverage shall contain the following language in at
least 10-point boldface type:

begin delete

YOUR

end delete

begin insert “YOUR end insert POLICY DOES NOT PROVIDE COVERAGE
AGAINST THE PERIL OF EARTHQUAKE.

CALIFORNIA LAW REQUIRES THAT EARTHQUAKE
COVERAGE BE OFFERED TO YOU AT YOUR OPTION.

WARNING: THESE COVERAGES MAY DIFFER
SUBSTANTIALLY FROM AND PROVIDE LESS
PROTECTION THAN THE COVERAGE PROVIDED BY YOUR
HOMEOWNERS’ INSURANCE POLICY. THERE ARE
EXCLUSIONS AND LIMITATIONS SUCH AS
OUTBUILDINGS, SWIMMING POOLS, MASONRY FENCES,
AND MASONRY CHIMNEYS. THIS DISCLOSURE FORM
CONTAINS ONLY A GENERAL DESCRIPTION OF
COVERAGES AND IS NOT PART OF YOUR EARTHQUAKE
INSURANCE POLICY. ONLY THE SPECIFIC PROVISIONS
OF YOUR POLICY WILL DETERMINE WHETHER A
PARTICULAR LOSS IS COVERED AND, IF SO, THE
AMOUNT PAYABLE.

THE COVERAGE, SUBJECT TO POLICY PROVISIONS,
MAY BE PURCHASED AT ADDITIONAL COST ON THE
FOLLOWING TERMS:

(A) AMOUNT OF DWELLING COVERAGE: ____

(B) APPLICABLE DEDUCTIBLE: ____ IF YOUR LOSS IS
BELOW THIS AMOUNT, YOU MAY NOT RECEIVE ANY
PAYMENT FROM YOUR COVERAGE.

YOUR INSURANCE COMPANY OR AGENT WILL
PROVIDE WRITTEN NOTICE AS TO HOW THE
DEDUCTIBLE APPLIES TO THE MARKET VALUE OF YOUR
COVERAGE, THE INSURED VALUE OF YOUR COVERAGE,
OR THE REPLACEMENT VALUE OF YOUR COVERAGE.

(C) CONTENTS COVERAGE: ____

IF YOUR LOSS DOES NOT EXCEED THE DEDUCTIBLE
FOR THE DWELLING, YOU WILL NOT RECEIVE ANY
PAYMENT FOR THIS COVERAGE.

YOUR INSURANCE COMPANY OR AGENT WILL
PROVIDE WRITTEN NOTICE AS TO HOW THE
DEDUCTIBLE APPLIES TO THE AMOUNT YOU RECEIVE
PURSUANT TO THIS COVERAGE.

(D) ADDITIONAL LIVING EXPENSES: ____

(E) RATE OR PREMIUM: ____

YOU MUST ASK THE COMPANY TO ADD EARTHQUAKE
COVERAGE WITHIN 30 DAYS FROM THE DATE OF
MAILING OF THIS NOTICE OR IT SHALL BE
CONCLUSIVELY PRESUMED THAT YOU HAVE NOT
ACCEPTED THIS OFFER.

THIS COVERAGE SHALL BE EFFECTIVE ON THE DAY
YOUR ACCEPTANCE OF THIS OFFER IS RECEIVED BY begin delete US. end delete
begin insert US.” end insert

(b) When the insurer, agent, or broker establishes delivery of
the disclosure form by obtaining the signature of the applicant or
insured, or when an insurer, agent, or broker 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,
agent, or broker has complied with the disclosure requirements of
this section.

(c) The offer may contain additional provisions not in conflict
with or in derogation of this section.

(d) The commissioner may only approve modifications to the
language prescribed in subdivision (a) if all of the following
conditions are met:

(1) The modifications are not in conflict with or in derogation
of any provision of this section or Section 10089.

(2) The modifications are necessary to ensure that the disclosure
statement accurately reflects the coverage actually provided by
the policy being offered.

(3) The modifications are strictly limited to necessary changes
so that the modified disclosure statement is otherwise identical to
the disclosure statement prescribed in this section.

(e) Use of the language prescribed by this section, or modified
language approved pursuant to subdivision (d), shall constitute
compliance with the requirements of Section 10081 by an insurer
subject thereto.

(f) This section shall remain in effect only until begin delete July 1, 2015, end delete
begin insert January 1, 2016, end insert and as of that date is repealed, unless a later
enacted statute, that is enacted before begin delete July 1, 2015, end delete begin insert January 1,
2016, end insert deletes or extends that date.

SEC. 2.  

Section 10083 is added to the Insurance Code, to read:

10083.  

(a) The offer of coverage required by Section 10081
may be made prior to, concurrent with, or within 60 days following
the issuance or renewal of a residential property insurance policy.
If the offer of coverage 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 on the application. The offer may
be made electronically pursuant to Section 38.5.

(1) If the offer is made by a nonparticipating insurer as defined
in Section 10089.5, the offer of earthquake coverage shall contain
all of the following language in at least 10-point boldface type:

“Your begin delete [property; renters; homeowners; condominium;
townhouse; dwelling; landlord; or other term that may describe
the type of companion policy] end delete begin insert residential property insurance end insert policy
does not cover earthquake damage to your home or its contents.
begin delete To end delete

begin insert To end insert cover earthquake damage to your home and its contents you
need to purchase a separate earthquake insurance policy. The
coverage provided by an earthquake insurance policy is different
from, and typically more limited than, the coverage provided by
your begin delete [property; renters; homeowners; condominium; townhouse;
dwelling; landlord; or other term that may describe the type of
companion policy] end delete begin insert residential property insurance end insert policy. begin delete California end delete

begin insert California end insert law requires insurance companies to offer earthquake
insurance in conjunction with a residential property insurance
policy. If you do not accept the offer of earthquake insurance below
within 30 days of the mailing of this notice, your insurance
company begin delete may end delete begin insert shall end insert presume that you have not accepted this offer
of earthquake insurance.

You may purchase earthquake insurance coverage begin delete , subject to
policy provisions, at additional cost on all of end delete begin insert on end insert the following
terms:

begin delete

(A) Amount of Dwelling Coverage [Insurers may reference
Building Property coverage if a Common Interest Development
policy.]: ___________________

end delete begin delete

(B) Applicable Deductible: ___________________ If your loss
is below this amount, you may not receive any payment for your
loss.

end delete begin delete

(C) Contents Coverage [Insurers may reference Personal
Property as that term is in the policy.]: [Insurers should include
and explain briefly how the deductible works. Some variation is
allowed, but samples include:

end delete begin delete

For a Homeowners Policy, the dwelling deductible applies to
Contents Coverage. Nothing will be paid until the dwelling
deductible is met by damage to Coverage A and Coverage B
property.

end delete begin delete

For Renters Policies and Common Interest Development Policies,
a $750 deductible applies to Contents Coverage.]

end delete begin delete

(D) Additional Living Expenses [Insurers may reference Loss
of Use.]: [Insurers shall explain briefly if there is a deductible and
how much it is.]

end delete begin insert

(A) Amount of Dwelling/Building Coverage Limit:
______________

end insert begin insert

(B) Deductible: ______________

end insert begin insert

(C) Contents Coverage Limit: ________________

end insert begin insert

(D) Additional Living Expenses Coverage Limit:
_________________

end insert

(E) Estimated Annual Premium:_______________

begin insert

The deductible represents the amount of damage your covered
property must incur before the earthquake insurance coverage
begins. If your covered loss is less than the applicable deductible,
you may not receive any payment.

end insert

Contact your insurance agent or your insurance company to
obtain details regarding this offer of earthquake insurance and
other coverage options.”

(2) If the offer is made by a participating insurer as defined by
Section 10089.5, the offer of earthquake coverage shall contain
all of the following language in at least 10-point boldface type:

“Your begin delete [property; renters; homeowners; condominium;
townhouse; dwelling; landlord; or other term that may describe
the type of companion policy] end delete begin insert residential property insurance end insert policy
does not cover earthquake damage to your home or its contents.
begin delete To end delete

begin insert To end insert cover earthquake damage to your home and its contents you
need to purchase a separate earthquake insurance policy. The
coverage provided by an earthquake insurance policy is different
from, and typically more limited than, the coverage provided by
your begin delete [property; renters; homeowners; condominium; townhouse;
dwelling; landlord; or other term that may describe the type of
companion policy] end delete begin insert residential property insurance end insert policy. begin delete California end delete

begin insert California end insert law requires insurance companies to offer earthquake
insurance in conjunction with a residential property insurance
policy. If you do not accept the offer of earthquake insurance below
within 30 days of the mailing of this notice, your insurance
company begin delete may end delete begin insert shall end insert presume that you have not accepted this offer
of earthquake insurance.

You may purchase earthquake insurance coverage begin delete , subject to
policy provisions, at additional cost on all of end delete begin insert on end insert the following
terms:

begin delete

(A) Amount of Dwelling Coverage [Insurers may reference
Building Property coverage if a Common Interest Development
policy.]: ___________________

(B) Applicable Deductible: ___________________ If your loss
is below this amount, you may not receive any payment for your
loss.

(C) Contents Coverage [Insurers may reference Personal
Property as that term is in the policy.]: [Insurers should include
and explain briefly how the deductible works. Some variation is
allowed, but samples include:

For a Homeowners Policy, the dwelling deductible applies to
Contents Coverage. Nothing will be paid until the dwelling
deductible is met by damage to Coverage A and Coverage B
property.

For Renters Policies and Common Interest Development Policies,
a $750 deductible applies to Contents Coverage.]

(D) Additional Living Expenses [Insurers may reference Loss
of Use.]: [Insurers shall explain briefly if there is a deductible and
how much it is.]

end delete begin insert

(A) Amount of Dwelling/Building Coverage Limit:
_______________

end insert begin insert

(B) Deductible: ______________

end insert begin insert

(C) Contents Coverage Limit: _______________

end insert begin insert

(D) Additional Living Expenses Coverage Limit:
_____________

end insert

(E) Estimated Annual Premium:_______________

begin delete

For an additional premium, you can choose California
Earthquake Authority (CEA) coverage options such as higher
limits for contents or additional living expenses coverages,
increased building code upgrade limits, or a lower deductible. You
can also choose to buy certain CEA coverages separately.

end delete begin insert

The deductible represents the amount of damage your covered
property must incur before the earthquake insurance coverage
begins. If your covered loss is less than the applicable deductible,
you may not receive any payment.

end insert begin insert

If you choose not to accept this offer within the 30-day period,
you may apply for earthquake coverage at a later date.

end insert begin insert

Your insurance company contracts with the California
Earthquake Authority (CEA) to offer earthquake insurance to its
customers. For an additional premium, you can choose CEA
coverage options such as higher limits for Contents or Additional
Living Expenses, increased building code upgrade limits, or a
lower deductible. You can also choose to buy certain CEA
coverages separately.

end insert

Contact your insurance agent or your insurance company to
obtain details regarding this offer of earthquake insurance and
other coverage options.”

(b) When the insurer, agent, or broker establishes delivery of
the disclosure form by obtaining the signature of the applicant or
insured, or when an insurer, agent, or broker 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,
agent, or broker has complied with the disclosure requirements of
this section.

(c) The offer may contain additional provisions not in conflict
with or in derogation of this section.

(d) The commissioner may only approve modifications to the
language prescribed in subdivision (a) if all of the following
conditions are met:

(1) The modifications are not in conflict with or in derogation
of any provision of this section or Section 10089.

(2) The modifications are necessary to ensure that the disclosure
statement accurately reflects the coverage actually provided by
the policy being offered.

(3) The modifications are strictly limited to necessary changes
so that the modified disclosure statement is otherwise identical to
the disclosure statement prescribed in this section.

(e) Use of the language prescribed by this section, or modified
language approved pursuant to subdivision (d), shall constitute
compliance with the requirements of Section 10081 by an insurer
subject to the requirements.

(f) This section shall become operative on begin delete July 1, 2015. end delete begin insert January
1, 2016. end insert

(g) This section shall remain in effect only until January 1, 2019,
and as of that date is repealed, unless a later enacted statute, that
is enacted before January 1, 2019, deletes or extends that date.

SEC. 3.  

Section 10083 of the Insurance Code, as added by
Section 13 of Chapter 369 of the Statutes of 2013, is amended to
read:

10083.  

(a) The offer of coverage required by Section 10081
may be made prior to, concurrent with, or within 60 days following
the issuance or renewal of a residential property insurance policy.
If the offer of coverage 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 on the application.

(1) If the offer is made by a nonparticipating insurer as defined
in Section 10089.5, the offer of earthquake coverage shall contain
all of the following language in at least 10-point boldface type:

“Your begin delete [property; renters; homeowners; condominium;
townhouse; dwelling; landlord; or other term that may describe
the type of companion policy] end delete begin insert residential property insurance end insert policy
does not cover earthquake damage to your home or its contents.
begin delete To end delete

begin insert To end insert cover earthquake damage to your home and its contents you
need to purchase a separate earthquake insurance policy. The
coverage provided by an earthquake insurance policy is different
from, and typically more limited than, the coverage provided by
your begin delete [property; renters; homeowners; condominium; townhouse;
dwelling; landlord; or other term that may describe the type of
companion policy] end delete begin insert residential property insurance end insert policy. begin delete California end delete

begin insert California end insert law requires insurance companies to offer earthquake
insurance in conjunction with a residential property insurance
policy. If you do not accept the offer of earthquake insurance below
within 30 days of the mailing of this notice, your insurance
company begin delete may end delete begin insert shall end insert presume that you have not accepted this offer
of earthquake insurance.

You may purchase earthquake insurance coverage begin delete , subject to
policy provisions, at additional cost on all of end delete begin insert on end insert the following
terms:

begin delete

(A) Amount of Dwelling Coverage [Insurers may reference
Building Property coverage if a Common Interest Development
policy.]: ___________________

(B) Applicable Deductible: ___________________ If your loss
is below this amount, you may not receive any payment for your
loss.

(C) Contents Coverage [Insurers may reference Personal
Property as that term is in the policy.]: [Insurers should include
and explain briefly how the deductible works. Some variation is
allowed, but samples include:

For a Homeowners Policy, the dwelling deductible applies to
Contents Coverage. Nothing will be paid until the dwelling
deductible is met by damage to Coverage A and Coverage B
property.

For Renters Policies and Common Interest Development Policies,
a $750 deductible applies to Contents Coverage.]

(D) Additional Living Expenses [Insurers may reference Loss
of Use.]: [Insurers shall explain briefly if there is a deductible and
how much it is.]

end delete begin insert

(A) Amount of Dwelling/Building Coverage Limit:
_______________

end insert begin insert

(B) Deductible: ______________

end insert begin insert

(C) Contents Coverage Limit: _______________

end insert begin insert

(D) Additional Living Expenses Coverage Limit:
_____________

end insert

(E) Estimated Annual Premium:_______________

begin insert

The deductible represents the amount of damage your covered
property must incur before the earthquake insurance coverage
begins. If your covered loss is less than the applicable deductible,
you may not receive any payment.

end insert

Contact your insurance agent or your insurance company to
obtain details regarding this offer of earthquake insurance and
other coverage options.”

(2) If the offer is made by a participating insurer as defined by
Section 10089.5, the offer of earthquake coverage shall contain
all of the following language in at least 10-point boldface type:

“Your begin delete [property; renters; homeowners; condominium;
townhouse; dwelling; landlord; or other term that may describe
the type of companion policy] end delete begin insert residential property insurance end insert policy
does not cover earthquake damage to your home or its contents.
begin delete To end delete

begin insert To end insert cover earthquake damage to your home and its contents you
need to purchase a separate earthquake insurance policy. The
coverage provided by an earthquake insurance policy is different
from, and typically more limited than, the coverage provided by
your begin delete [property; renters; homeowners; condominium; townhouse;
dwelling; landlord; or other term that may describe the type of
companion policy] end delete begin insert residential property insurance end insert policy. begin delete California end delete

begin insert California end insert law requires insurance companies to offer earthquake
insurance in conjunction with a residential property insurance
policy. If you do not accept the offer of earthquake insurance below
within 30 days of the mailing of this notice, your insurance
company begin delete may end delete begin insert shall end insert presume that you have not accepted this offer
of earthquake insurance.

You may purchase earthquake insurance coverage begin delete , subject to
policy provisions, at additional cost on all of end delete begin insert on end insert the following
terms:

begin delete

(A) Amount of Dwelling Coverage [Insurers may reference
Building Property coverage if a Common Interest Development
policy.]: ___________________

end delete begin delete

(B) Applicable Deductible: ___________________ If your loss
is below this amount, you may not receive any payment for your
loss.

end delete begin delete

(C) Contents Coverage [Insurers may reference Personal
Property as that term is in the policy.]: [Insurers should include
and explain briefly how the deductible works. Some variation is
allowed, but samples include:

end delete begin delete

For a Homeowners Policy, the dwelling deductible applies to
Contents Coverage. Nothing will be paid until the dwelling
deductible is met by damage to Coverage A and Coverage B
property.

end delete begin delete

For Renters Policies and Common Interest Development Policies,
a $750 deductible applies to Contents Coverage.]

end delete begin delete

(D) Additional Living Expenses [Insurers may reference Loss
of Use.]: [Insurers shall explain briefly if there is a deductible and
how much it is.]

end delete begin insert

(A) Amount of Dwelling/Building Coverage Limit:
_______________

end insert begin insert

(B) Deductible: ______________

end insert begin insert

(C) Contents Coverage Limit: _______________

end insert begin insert

(D) Additional Living Expenses Coverage Limit:
_____________

end insert

(E) Estimated Annual Premium:_______________

begin delete

For an additional premium, you can choose California
Earthquake Authority (CEA) coverage options such as higher
limits for contents or additional living expenses coverages,
increased building code upgrade limits, or a lower deductible. You
can also choose to buy certain CEA coverages separately.

end delete begin insert

The deductible represents the amount of damage your covered
property must incur before the earthquake insurance coverage
begins. If your covered loss is less than the applicable deductible,
you may not receive any payment.

end insert begin insert

If you choose not to accept this offer within the 30-day period,
you may apply for earthquake coverage at a later date.

end insert begin insert

Your insurance company contracts with the California
Earthquake Authority (CEA) to offer earthquake insurance to its
customers. For an additional premium, you can choose CEA
coverage options such as higher limits for Contents or Additional
Living Expenses, increased building code upgrade limits, or a
lower deductible. You can also choose to buy certain CEA
coverages separately.

end insert

Contact your insurance agent or your insurance company to
obtain details regarding this offer of earthquake insurance and
other coverage options.”

 

(b) When the insurer, agent, or broker establishes delivery of
the disclosure form by obtaining the signature of the applicant or
insured, or when an insurer, agent, or broker 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,
agent, or broker has complied with the disclosure requirements of
this section.

(c) The offer may contain additional provisions not in conflict
with or in derogation of this section.

(d) The commissioner may only approve modifications to the
language prescribed in subdivision (a) if all of the following
conditions are met:

(1) The modifications are not in conflict with or in derogation
of any provision of this section or Section 10089.

(2) The modifications are necessary to ensure that the disclosure
statement accurately reflects the coverage actually provided by
the policy being offered.

(3) The modifications are strictly limited to necessary changes
so that the modified disclosure statement is otherwise identical to
the disclosure statement prescribed in this section.

(e) Use of the language prescribed by this section, or modified
language approved pursuant to subdivision (d), shall constitute
compliance with the requirements of Section 10081 by an insurer
subject thereto.

(f) This section shall become operative on January 1, 2019.

SEC. 4.  

Section 10086 of the Insurance Code, as amended by
Section 14 of Chapter 369 of the Statutes of 2013, is amended to
read:

10086.  

(a) If an offer of earthquake coverage is accepted, the
coverage shall be continued at the applicable rates and conditions
for the policy term, provided the policy of residential property
insurance is not terminated by the named insured or insurer.

(1) At any renewal, an insurer may modify the terms and
conditions of an existing policy, rider, or endorsement providing
coverage against loss or damage caused by the peril of earthquake
if the modified terms and conditions provide the minimum
coverages required by Section 10089.

(2) An insurer that modifies the terms and conditions of an
existing policy, rider, or endorsement shall provide the insured
with the renewal notice in a stand-alone disclosure document
stating the changes in the terms and conditions of the insured’s
existing policy, rider, or endorsement. The offer of renewal may
be made electronically pursuant to Section 38.5. Proof of mailing
of the disclosure document by first-class mail to a named insured
at the mailing address shown on the policy or application, or proof
consistent with Section 38.5 that the offer of renewal of coverage
was sent to the named insured or applicant by electronic
transmission, creates a conclusive presumption that the disclosure
document was provided. The disclosure shall include the following
statement in 14-point boldface type:

begin delete

THE

end delete

begin insert “THE end insert COVERAGE IN THE POLICY WE ARE OFFERING
YOU WITH THIS RENEWAL HAS BEEN REDUCED, AND
SUBSTANTIALLY DIFFERS FROM THE COVERAGES
PROVIDED BY YOUR HOMEOWNERS’ POLICY.
INSURANCE COMPANIES ARE ALLOWED TO RENEW
EARTHQUAKE INSURANCE POLICIES WITH COVERAGE
THAT IS REDUCED FROM THE COVERAGE YOU
PREVIOUSLY PURCHASED. YOU MAY REQUEST A
SAMPLE COPY OF THIS NEW POLICY TO REVIEW PRIOR
TO MAKING A DECISION TO ACCEPT THIS RENEWAL,
AND WE WILL MAIL OR DELIVER IT TO YOU WITHIN 14
DAYS OF YOUR REQUEST. A REQUEST FOR THE SAMPLE
COPY SHALL NOT CHANGE OR EXTEND THE POLICY
EXPIRATION DATE SPECIFIED IN THE RENEWAL NOTICE.
A SUMMARY OF THE CHANGES IS INCLUDED WITH THIS
begin delete NOTICE. end delete begin insert NOTICE.” end insert

The commissioner shall approve the form of the summary at the
time he or she approves the policy. The summary shall include the
information contained in subdivision (a) of Section 10083, and
may be included with the renewal notice in standard type.

The commissioner may approve substantially similar disclosure
forms if necessary to accurately disclose relevant information to
the policyholder. The commissioner may also approve disclosure
forms substantially similar to the disclosure statement required by
Section 10083 if necessary to accurately disclose relevant
information to the policyholder.

(3) If the earthquake coverage is provided by a policy issued
by the California Earthquake Authority, the following disclosure
shall be provided in 14-point boldface type:

begin delete

CALIFORNIA

end delete

begin insert “CALIFORNIA end insert EARTHQUAKE AUTHORITY POLICY
DISCLOSURE

THIS POLICY IS BEING PURCHASED FROM THE
CALIFORNIA EARTHQUAKE AUTHORITY (“CEA”). THE
COVERAGE IN THIS CEA POLICY SUBSTANTIALLY
DIFFERS FROM THE COVERAGES PROVIDED IN YOUR
HOMEOWNER’S POLICY. THE CEA IS NOT PART OF OR
ASSOCIATED WITH YOUR HOMEOWNER’S INSURANCE
COMPANY. IF LOSSES AS A RESULT OF AN EARTHQUAKE
OR A SERIES OF EARTHQUAKES EXCEED THE
AVAILABLE RESOURCES OF THE CEA, THIS POLICY IS
NOT COVERED BY THE CALIFORNIA INSURANCE
GUARANTY ASSOCIATION. THEREFORE, THE
CALIFORNIA INSURANCE GUARANTY ASSOCIATION
WILL NOT PAY YOUR CLAIMS OR PROTECT YOUR
ASSETS IF THE CEA BECOMES INSOLVENT AND IS
UNABLE TO MAKE PAYMENTS AS PROMISED. IN
ADDITION, YOUR CEA POLICY MAY BE SUBJECT TO
FUTURE SURCHARGES OF THE POLICY PREMIUM IN
CERTAIN CASES WHERE AN EARTHQUAKE OR SERIES
OF EARTHQUAKES HAS EXCEEDED AVAILABLE
RESOURCES TO PAY CLAIMS. IN THAT CASE, THIS
MEANS THAT IN ADDITION TO THE ANNUAL PREMIUM,
YOU MAY BE CHARGED UP TO AN ADDITIONAL 20% OF
THE begin delete PREMIUM. end delete begin insert PREMIUM.” end insert

(b) If the offer is not accepted, the insurer or any affiliated
insurer shall be required on an every other year basis to offer
earthquake coverage in connection with any continuation, renewal,
or reinstatement of the policy following any lapse thereof, or with
respect to any other policy that extends, changes, supersedes, or
replaces the policy of residential property insurance. The offer
may be made electronically pursuant to Section 38.5.

(c) Nothing in this section shall preclude the named insured
from terminating the earthquake coverage at any time.

(d) This section shall remain in effect only until begin delete July 1, 2015, end delete
begin insert January 1, 2016, end insert and as of that date is repealed, unless a later
enacted statute, that is enacted before begin delete July 1, 2015, end delete begin insert January 1,
2016, end insert deletes or extends that date.

SEC. 5.  

Section 10086 is added to the Insurance Code, to read:

10086.  

(a) If an offer of earthquake coverage, made pursuant
to Section 10081, is accepted, the coverage shall be continued at
the applicable rates and conditions for the policy term, provided
the policy of residential property insurance is not terminated by
the named insured or insurer.

(1) At any renewal, an insurer may modify the terms and
conditions of an existing policy, rider, or endorsement providing
coverage against loss or damage caused by the peril of earthquake
if the modified terms and conditions provide the minimum
coverages required by Section 10089.

(2) An insurer that modifies the terms and conditions of an
existing policy, rider, or endorsement shall provide the insured
with the renewal notice in a stand-alone disclosure document
stating the changes in the terms and conditions of the insured’s
existing policy, rider, or endorsement. The offer of renewal may
be made electronically pursuant to Section 38.5. Proof of mailing
of the disclosure document by first-class mail to a named insured
at the mailing address shown on the policy or application, or proof
consistent with Section 38.5 that the offer of renewal of coverage
was sent to the named insured or applicant by electronic
transmission, creates a conclusive presumption that the disclosure
document was provided. The disclosure shall include the following
statement in 14-point boldface type:

“THE COVERAGE IN THE POLICY WE ARE OFFERING
YOU WITH THIS RENEWAL HAS BEEN REDUCED, AND
SUBSTANTIALLY DIFFERS FROM THE COVERAGES
PROVIDED BY YOUR HOMEOWNERS’ POLICY.
INSURANCE COMPANIES ARE ALLOWED TO RENEW
EARTHQUAKE INSURANCE POLICIES WITH COVERAGE
THAT IS REDUCED FROM THE COVERAGE YOU
PREVIOUSLY PURCHASED. YOU MAY REQUEST A
SAMPLE COPY OF THIS NEW POLICY TO REVIEW PRIOR
TO MAKING A DECISION TO ACCEPT THIS RENEWAL,
AND WE WILL MAIL OR DELIVER IT TO YOU WITHIN 14
DAYS OF YOUR REQUEST. A REQUEST FOR THE SAMPLE
COPY SHALL NOT CHANGE OR EXTEND THE POLICY
EXPIRATION DATE SPECIFIED IN THE RENEWAL NOTICE.
A SUMMARY OF THE CHANGES IS INCLUDED WITH THIS
NOTICE.”

The commissioner shall approve the form of the summary at the
time he or she approves the policy. The summary shall include the
information contained in subdivision (a) of Section 10083, and
may be included with the renewal notice in standard type.

The commissioner may approve substantially similar disclosure
forms if necessary to accurately disclose relevant information to
the policyholder. The commissioner may also approve disclosure
forms substantially similar to the disclosure statement required by
Section 10083 if necessary to accurately disclose relevant
information to the policyholder.

(b) If the offer of earthquake coverage made pursuant to Section
10081 is not accepted, the insurer or any affiliated insurer shall be
required on an every other year basis to offer earthquake coverage
in connection with any continuation, renewal, or reinstatement of
the policy following any lapse thereof, or with respect to any other
policy that extends, changes, supersedes, or replaces the policy of
residential property insurance. The offer may be made
electronically pursuant to Section 38.5.

(c) Nothing in this section shall preclude the named insured
from terminating the earthquake coverage at any time.

(d) This section shall become operative on begin delete July 1, 2015. end delete begin insert January
1, 2016. end insert

(e) This section shall remain in effect only until January 1, 2019,
and as of that date is repealed, unless a later enacted statute, that
is enacted before January 1, 2019, deletes or extends that date.

SEC. 6.  

Section 10086 of the Insurance Code, as added by
Section 15 of Chapter 369 of the Statutes of 2013, is amended to
read:

10086.  

(a) If an offer of earthquake coverage, made pursuant
to Section 10081, is accepted, the coverage shall be continued at
the applicable rates and conditions for the policy term, provided
the policy of residential property insurance is not terminated by
the named insured or insurer.

(1) At any renewal, an insurer may modify the terms and
conditions of an existing policy, rider, or endorsement providing
coverage against loss or damage caused by the peril of earthquake
if the modified terms and conditions provide the minimum
coverages required by Section 10089.

(2) An insurer that modifies the terms and conditions of an
existing policy, rider, or endorsement shall provide the insured
with the renewal notice in a stand-alone disclosure document
stating the changes in the terms and conditions of the insured’s
existing policy, rider, or endorsement. Proof of mailing of the
disclosure document by first-class mail to a named insured at the
mailing address shown on the policy or application creates a
conclusive presumption that the disclosure document was provided.
The disclosure shall include the following statement in 14-point
boldface type:

 

“THE COVERAGE IN THE POLICY WE ARE OFFERING
YOU WITH THIS RENEWAL HAS BEEN REDUCED, AND
SUBSTANTIALLY DIFFERS FROM THE COVERAGES
PROVIDED BY YOUR HOMEOWNERS’ POLICY.
INSURANCE COMPANIES ARE ALLOWED TO RENEW
EARTHQUAKE INSURANCE POLICIES WITH COVERAGE
THAT IS REDUCED FROM THE COVERAGE YOU
PREVIOUSLY PURCHASED. YOU MAY REQUEST A
SAMPLE COPY OF THIS NEW POLICY TO REVIEW PRIOR
TO MAKING A DECISION TO ACCEPT THIS RENEWAL,
AND WE WILL MAIL OR DELIVER IT TO YOU WITHIN 14
DAYS OF YOUR REQUEST. A REQUEST FOR THE SAMPLE
COPY SHALL NOT CHANGE OR EXTEND THE POLICY
EXPIRATION DATE SPECIFIED IN THE RENEWAL NOTICE.
A SUMMARY OF THE CHANGES IS INCLUDED WITH THIS
NOTICE.”

 

The commissioner shall approve the form of the summary at the
time he or she approves the policy. The summary shall include the
information contained in subdivision (a) of Section 10083, and
may be included with the renewal notice in standard type.

The commissioner may approve substantially similar disclosure
forms if necessary to accurately disclose relevant information to
the policyholder. The commissioner may also approve disclosure
forms substantially similar to the disclosure statement required by
Section 10083 if necessary to accurately disclose relevant
information to the policyholder.

(b) If the offer of earthquake coverage made pursuant to Section
10081 is not accepted, the insurer or any affiliated insurer shall be
required on an every other year basis to offer earthquake coverage
in connection with any continuation, renewal, or reinstatement of
the policy following any lapse thereof, or with respect to any other
policy that extends, changes, supersedes, or replaces the policy of
residential property insurance.

(c) Nothing in this section shall preclude the named insured
from terminating the earthquake coverage at any time.

(d) This section shall become operative on January 1, 2019.

SEC. 7.  

Section 10089.6 of the Insurance Code is amended to
read:

10089.6.  

(a) There is hereby created the California Earthquake
Authority, which shall be administered under the authority of the
commissioner and have the powers conferred by this chapter. The
authority shall be authorized to transact insurance in this state as
necessary to sell policies of basic residential earthquake insurance
in the manner set forth in Sections 10089.26, 10089.27, and
10089.28. The authority shall have no authority to transact any
other type of insurance business.

(b) (1) The investments of the authority shall be limited to those
securities eligible under Section 16430 of the Government Code.

(2) The rights, obligations, and duties owed by the authority to
its insureds, beneficiaries of insureds, and applicants for insurance
shall be the same as the rights, obligations, and duties owed by
insurers to its insureds, beneficiaries of begin delete insureds end delete begin insert insureds, end insert and
applicants for insurance under common law, regulations, and
statutes. The authority shall be liable to its insureds, beneficiaries
of insureds, and applicants for insurance as an insurer is liable to
its insureds, beneficiaries of insureds, and applicants for insurance
under common law, regulations, and statutes.

(c) The operating expenses of the authority shall be capped at
not more than begin delete 3 end delete begin insert 6 end insert percent of the premium income received by the
authority. The funds shall be available to pay any advocacy fees
awarded in a proceeding under subdivision (c) of Section 10089.11.

begin delete

(d) This section shall remain in effect only until July 1, 2015,
and as of that date is repealed, unless a later enacted statute, that
is enacted before July 1, 2015, deletes or extends that date.

end delete begin insert

(d) For purposes of this section, the term “operating expenses
of the authority” excludes solely the following:

end insert begin insert

(1) The costs of and transaction expenses associated with
risk-transfer purchases, including the purchase of reinsurance
and with capital-market contracts.

end insert begin insert

(2) The expense of securing and repaying bonds.

end insert begin insert

(3) The cost of repayment of bonds guaranteed, insured, or
otherwise backed by any department or agency of the United States
or of this state, or by any private entity.

end insert begin insert

(4) Payments to third parties for all of the following services
provided to the authority:

end insert begin insert

(A) Investment.

end insert begin insert

(B) Loss-modeling.

end insert begin insert

(C) Legal services.

end insert begin insert

(5) Costs associated with the authority’s efforts to acquaint the
public with and market authority products, promote earthquake
preparedness, and earthquake-loss mitigation under the authority’s
duly adopted strategic plan.

end insert begin insert

(6) Producer compensation.

end insert begin insert

(7) Participating insurer fees and reimbursement amounts
arising under written contracts.

end insert begin insert

(8) Amounts paid by the authority to support research in seismic
science and seismic engineering.

end insert begin insert

(9) Loans, grants, and expenses to support and maintain the
authority’s earthquake loss-mitigation goals and programs,
whether conducted by the authority alone or in collaboration with
or by other persons.

end insert begin insert

(10) The costs of and loss-adjustment expenses associated with
adjusting and paying policyholder claims for earthquake losses
that are incurred by the authority under its earthquake insurance
policies, including all costs and expenses associated with
claim-related litigation, provided that all of those costs and
expenses shall be reported to the Legislature in the manner
required by subdivision (e) of Section 10089.13.

end insert

begin delete

SEC. 8.  

Section 10089.6 is added to the Insurance Code, to
read:

10089.6.  

(a) There is hereby created the California Earthquake
Authority, which shall be administered under the authority of the
commissioner and have the powers conferred by this chapter. The
authority shall be authorized to transact insurance in this state as
necessary to sell policies of basic residential earthquake insurance
in the manner set forth in Sections 10089.26, 10089.27, and
10089.28. The authority shall have no authority to transact any
other type of insurance business.

(b) (1) The investments of the authority shall be limited to those
securities eligible under Section 16430 of the Government Code.

(2) The rights, obligations, and duties owed by the authority to
its insureds, beneficiaries of insureds, and applicants for insurance
shall be the same as the rights, obligations, and duties owed by
insurers to its insureds, beneficiaries of insureds, and applicants
for insurance under common law, regulations, and statutes. The
authority shall be liable to its insureds, beneficiaries of insureds,
and applicants for insurance as an insurer is liable to its insureds,
beneficiaries of insureds, and applicants for insurance under
common law, regulations, and statutes.

(c) The operating expenses of the authority shall be capped at
not more than 5 percent of the premium income received by the
authority. The funds shall be available to pay any advocacy fees
awarded in a proceeding under subdivision (c) of Section 10089.11.

(d) For purposes of this subdivision, the term “operating
expenses of the authority” excludes solely the following:

(1) The costs of and transaction expenses associated with
risk-transfer purchases, including the purchase of reinsurance and
with capital-market contracts.

(2) The expense of securing and repaying bonds.

(3) The cost of repayment of bonds guaranteed, insured, or
otherwise backed by any department or agency of the United States
or of this state, or by any private entity.

(4) Payments to third parties for all of the following services
provided to the authority:

(A) Investment.

(B) Loss-modeling.

(C) Legal services.

(5) Costs associated with the authority’s efforts to acquaint the
public with and market authority products, promote earthquake
preparedness, and earthquake-loss mitigation under the authority’s
duly adopted strategic plan.

(6) Producer compensation.

(7) Participating insurer fees and reimbursement amounts arising
under written contracts.

(8) Amounts paid by the authority to support research in seismic
science and seismic engineering.

(9) Loans, grants, and expenses to support and maintain the
authority’s earthquake loss-mitigation goals and programs, whether
conducted by the authority alone or in collaboration with or by
other persons.

(10) The costs of and loss-adjustment expenses associated with
adjusting and paying policyholder claims for earthquake losses
that are incurred by the authority under its earthquake insurance
policies, including all costs and expenses associated with
claim-related litigation, provided that all of those costs and
expenses shall be reported to the Legislature in the manner required
by subdivision (e) of Section 10089.13.

(e) This section shall become operative on July 1, 2015.

end delete

begin delete SEC. 9. end delete
begin insert SEC. 8. end insert   

Section 10089.26 of the Insurance Code is amended
to read:

10089.26.  

(a) The authority shall issue policies of basic
residential earthquake insurance, including begin insert an option for end insert earthquake
loss assessment policies for individual condominium unit
properties, to any owner of a qualifying residential property, as
long as the owner has secured a policy of residential property
insurance from a participating insurer.

(1) For purposes of this section, earthquake loss assessment
coverage shall be issued in a minimum amount of fifty thousand
dollars ($50,000) for individual condominium units valued at more
than one hundred thirty-five thousand dollars ($135,000).
Earthquake loss assessment coverage shall be issued in a minimum
amount of twenty-five thousand dollars ($25,000) for individual
condominium units of one hundred thirty-five thousand dollars
($135,000) in value or less. The value of the land shall be excluded
when determining the value of the condominium, as it relates to
the earthquake loss assessment coverage offered by the authority.

(2) The panel shall submit to the board, and the board shall
approve, rates for earthquake loss assessment coverage that
reasonably balance the earthquake loss assessment coverages
offered and the potential exposure to earthquake loss resulting
from an earthquake loss assessment policy as compared to the
coverages offered and the potential exposure to earthquake loss
resulting from residential property other than individual
condominium policies.

It is the intent of the Legislature, to the extent practicable, that
rates charged by the authority to condominium loss assessment
policyholders and residential property owner policyholders are
treated equitably, and that a proportionate share of premiums is
paid for potential exposure to loss, to the authority.

(b) Nothing in this section shall prohibit a participating or
nonparticipating insurer from offering a condominium earthquake
loss assessment policy for different amounts of coverage other
than those offered by the authority.

begin delete

(c) This section shall remain in effect only until July 1, 2015,
and as of that date is repealed, unless a later enacted statute, that
is enacted before July 1, 2015, deletes or extends that date.

end delete

begin delete

SEC. 10.  

Section 10089.26 is added to the Insurance Code, to
read:

10089.26.  

(a) (1) The authority shall issue policies of basic
residential earthquake insurance, including earthquake loss
assessment policies for individual condominium unit properties,
to any owner of a qualifying residential property, as long as the
owner has secured a policy of residential property insurance from
a participating insurer.

(2) A policy of residential earthquake insurance written by the
authority shall be effective upon receipt by the participating insurer
of both of the following:

(A) The completed authority-approved application for the policy,
signed by the applicant.

(B) Either the annual premium or the first installment of the
annual premium.

(b) For purposes of this section, earthquake loss assessment
coverage shall be issued in a minimum amount of fifty thousand
dollars ($50,000) for individual condominium units valued at more
than one hundred thirty-five thousand dollars ($135,000).
Earthquake loss assessment coverage shall be issued in a minimum
amount of twenty-five thousand dollars ($25,000) for individual
condominium units of one hundred thirty-five thousand dollars
($135,000) in value or less. The value of the land shall be excluded
when determining the value of the condominium, as it relates to
the earthquake loss assessment coverage offered by the authority.

(c) The panel shall submit to the board, and the board shall
approve, rates for earthquake loss assessment coverage that
reasonably balance the earthquake loss assessment coverages
offered and the potential exposure to earthquake loss resulting
from an earthquake loss assessment policy as compared to the
coverages offered and the potential exposure to earthquake loss
resulting from residential property other than individual
condominium policies.

(d) It is the intent of the Legislature, to the extent practicable,
that rates charged by the authority to condominium loss assessment
policyholders and residential property owner policyholders are
treated equitably, and that a proportionate share of the premium
is paid for potential exposure to loss, to the authority.

(e) Nothing in this section shall prohibit a participating or
nonparticipating insurer from offering a condominium earthquake
loss assessment policy for different amounts of coverage other
than those offered by the authority.

(f) This section shall become operative on July 1, 2015.

end delete

begin delete SEC. 11. end delete
begin insert SEC. 9. end insert   

Section 10089.28 of the Insurance Code is amended
to read:

10089.28.  

(a) All policies of residential earthquake insurance
provided by the authority shall be written by the authority.
Authority policies shall be marketed and policyholders serviced
by the participating insurer that writes the underlying policy of
residential property insurance, and participating insurers shall be
reasonably compensated for the claims and policyholder services
they provide on behalf of the authority. Authority services may be
performed on behalf of the authority in any reasonable manner by
the participating insurer that is in compliance with statutory,
regulatory, and case laws regarding claims handling practices;
provided, however, where the authority has promulgated specific
procedures to govern its operations, the participating insurer shall
conform its practices to those procedures. The authority procedures
shall comply with statutory, regulatory, and case law governing
claims handling practices. Nothing in this provision shall be
deemed or construed to affect any duty or liability of the authority
or participating carrier as set forth in paragraphs (2) and (3) of
subdivision (e) of Section 10089.7.

(b) The participating insurer shall notify each of its insureds
that the authority is the provider of earthquake coverage under the
policy. The form and method of notice shall meet standards
established by the commissioner by regulation. The authority shall
provide to participating insurers appropriate applications and forms
and shall maintain records of all policies written, moneys received,
and claims paid.

(c) The duty of an agent or broker to investigate the financial
condition of the authority before placement of insurance shall be
the same as the duty of an agent or broker to investigate the
financial condition of an admitted insurer before placement of a
policy of insurance.

(d) This section shall remain in effect only until begin delete July 1, 2015, end delete
begin insert January 1, 2016, end insert and as of that date is repealed, unless a later
enacted statute, that is enacted before begin delete July 1, 2015, end delete begin insert January 1,
2016, end insert deletes or extends that date.

begin delete SEC. 12. end delete
begin insert SEC. 10. end insert   

Section 10089.28 is added to the Insurance Code, to
read:

10089.28.  

(a) All policies of residential earthquake insurance
provided by the authority shall be written by the authority.
Authority policies shall be marketed and policyholders serviced
by the participating insurer that writes the underlying policy of
residential property insurance, and participating insurers shall be
reasonably compensated for the claims and policyholder services
they provide on behalf of the authority. Authority services may be
performed on behalf of the authority in any reasonable manner by
the participating insurer that is in compliance with statutory,
regulatory, and case law regarding claims handling practices;
provided, however, where the authority has promulgated specific
procedures to govern its operations, the participating insurer shall
conform its practices to those procedures. The authority procedures
shall comply with statutory, regulatory, and case law governing
claims handling practices. Nothing in this provision shall be
deemed or construed to affect any duty or liability of the authority
or participating carrier as set forth in paragraphs (2) and (3) of
subdivision (e) of Section 10089.7.

(b) Concurrent with the issuance or renewal by the authority of
a residential earthquake insurance policy, begin delete the participating insurer
shall provide end delete the following disclosure begin insert shall be provided end insert to the
insured in 14-point boldface type:

 

“California Earthquake Authority Policy Disclosure

You have purchased a California Earthquake Authority (CEA)
earthquake insurance policy, which can help you cover the cost of
repairing damage to your property and possessions caused by an
earthquake.

The CEA is not part of your homeowners’ insurance company.

Please keep in mind these important things about your CEA
insurance policy:

1. CEA policy coverages are different from the coverages
provided in your homeowners’ insurance policy. For example, this
policy does not cover earthquake damage to swimming pools, and
it may provide more limited coverage for chimneys, outbuildings,
and masonry fences. These are examples of possible differences
between your CEA policy and your homeowners’ policy, and you
should consult your CEA policy to understand the types of losses
that are limited or excluded and those that are covered.

2. If CEA’s liability for earthquake losses exceeds the CEA’s
available resources the CEA may reduce its payment to you or pay
you in installments. This policy is not covered by the California
Insurance Guarantee Association, and therefore, the California
Insurance Guarantee Association will not pay your claims if the
CEA becomes insolvent and is unable to make payments as
promised.

3. In certain cases, your CEA policy premium may be subject
to future surcharges if the CEA’s obligations to pay earthquake
losses rise to a pre-defined level. In that case, in addition to your
annual premium you may be charged up to an additional 20% of
that premium.”

 

(c) The authority shall provide to participating insurers
appropriate applications and forms and shall maintain records of
all policies written, moneys received, and claims paid.

(d) The duty of an agent or broker to investigate the financial
condition of the authority before placement of insurance shall be
the same as the duty of an agent or broker to investigate the
financial condition of an admitted insurer before placement of a
policy of insurance.

(e) This section shall become operative on begin delete July 1, 2015. end delete begin insert January
1, 2016. end insert

begin delete

SEC. 13.  

Section 10089.42 is added to the Insurance Code, to
read:

10089.42.  

(a) A policy of residential property insurance shall
not be issued, delivered, or renewed in this state, by any
participating insurer unless the named insured is provided
information on the availability of residential earthquake insurance
from the authority within 60 days of issuance or renewal of the
insured’s residential insurance policy. The information required
by this subdivision shall do all of the following:

(1) Notify the insured that the residential property insurance
policy does not provide coverage for loss or damage caused by
the peril of earthquake.

(2) Disclose that the insured can apply at any time through the
participating insurer for insurance issued by the authority that
covers loss or damage caused by the peril of earthquake.

(3) Notify the insured that a policy of residential earthquake
insurance from the authority provides different protection, and in
some cases less protection, than the residential property insurance
policy.

(4) Inform the insured of the amounts of premium and deductible
applicable to base-limits authority earthquake insurance coverage.

(5) Direct the insured to an Internet Web site maintained by the
participating insurer or by the authority, or jointly by both, where
the insured can obtain premium estimates and information on
additional earthquake insurance coverages, coverage limits,
deductibles, and other policy and coverage features for a residential
earthquake insurance policy from the authority.

(6) Direct the insured to an Internet Web site or toll-free
telephone number, or both, where the insured can be referred to
or speak with a representative or broker-agent of the participating
insurer who can facilitate the preparation and receipt of an
application for residential earthquake insurance written by the
authority.

(b) The participating insurer may, but shall not be required to,
provide the information required under this section to any insured
who has purchased through that participating insurer, and has in
force, a residential earthquake insurance policy written by the
authority.

(c) The authority shall prepare forms of the information required
for use by participating insurers and submit them to the
commissioner for approval. The commissioner shall approve a
form if it accurately discloses the information required by
subdivision (a). The forms are not required to be reproduced in
identical form to the disclosures and advice set forth in subdivision
(a), and they may contain provisions additional to those set forth
in subdivision (a) if the additional provisions do not conflict with
this section.

(d) (1) The information required by this section may be made
electronically pursuant to Section 38.5.

(2) Proof of mailing of any information required by this section
by first-class mail to a named insured at the mailing address shown
on the policy or application, or proof consistent with Section 38.5
that the information was sent to the named insured or applicant by
electronic transmission, creates a conclusive presumption that the
information required by this section was provided.

(e) This section shall become operative on July 1, 2015.

end delete

begin insert

begin insert SEC. 11. end insert   

end insert

begin insert Section 10089.42 is added to the end insert begin insert Insurance Code end insert begin insert , to
read: end insert

begin insert

begin insert 10089.42. end insert   

(a) At least once each year a participating insurer
shall provide each of its residential property insureds with
marketing documents produced at the authority’s expense.

(b) This section shall become operative on January 1, 2016.

end insert